Exchange Rate Policy and Endogenous Price Flexibility

2004 ◽  
Author(s):  
Michael B. Devereux
Keyword(s):  
Exchange Rate ◽  
Exchange Rate Policy ◽  
Rate Policy ◽  
Price Flexibility

scholarly journals Why monetary board: Monetary board and endogenic price flexibility

2004 ◽  
Vol 49 (162) ◽  
pp. 175-188
Author(s):  
Tamara Basic
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Optimal Policy ◽  
Flexible Exchange Rate ◽  
Exchange Rate Policy ◽  
Optimal Monetary Policy ◽  
Rate Policy ◽  
Price Flexibility ◽  
The Difference ◽  
Initial Price

The paper presents a model which proves that a unilateral exchange rate fixing, i.e. monetary board, as opposed to certain opinions, is an optimal policy since it increases flexibility of nominal prices, which is the ultimate goal of a flexible exchange rate policy. A suitable calibration of the model shows that the higher the initial price flexibility, the lower the difference needed for "utility increase" in getting the producers to switch from fixed to flexible prices. The results obtained in all cases indicate that exchange rate fixing increases price flexibility, which proves that a unilateral exchange rate fixing, i.e. monetary board, could be an optimal monetary policy.

Fear of Free Floating or Forced Exchange Rate Fixing

2004 ◽  
pp. 112-122
Author(s):  
O. Osipova
Keyword(s):  
Exchange Rate ◽  
Financial Crisis ◽  
Exchange Rates ◽  
Inflation Targeting ◽  
Exchange Rate Policy ◽  
Float Exchange Rate ◽  
Floating Exchange Rate ◽  
Rate Policy ◽  
Exchange Rate Arrangements ◽  
Pass Through

After the financial crisis at the end of the 1990 s many countries rejected fixed exchange rate policy. However actually they failed to proceed to announced "independent float" exchange rate arrangement. This might be due to the "fear of floating" or an irreversible result of inflation targeting central bank policy. In the article advantages and drawbacks of fixed and floating exchange rate arrangements are systematized. Features of new returning to exchange rates stabilization and possible risks of such policy for Russia are considered. Special attention is paid to the issue of choice of a "target" currency composite which can minimize external inflation pass-through.

Exchange Rate Regimes and Economic Stability

2010 ◽  
pp. 29-43
Author(s):  
S. Smirnov
Keyword(s):  
Exchange Rate ◽  
Inflation Targeting ◽  
Exchange Rate Regime ◽  
Exchange Rate Policy ◽  
Real Sector ◽  
Economic Stability ◽  
Exogenous Shocks ◽  
Floating Exchange Rate ◽  
Rate Policy ◽  
Managed Floating

The Bank of Russia intends to introduce inflation targeting policy and exchange rate free floating regime in three years. Exogenous shocks absorption which stabilizes the real sector of economy is usually considered to be one of the advantages of free floating exchange rate policy. However, our research based on the analysis of 25 world largest economies exchange rates and industrial production during the crisis of 2008-2009 does not confirm this hypothesis. The article also analyzes additional risks associated with free floating exchange rate regime in Russia and presents some arguments in favor of managed floating exchange rate regime.

On the Exchange Rate Policy

2010 ◽  
pp. 21-28
Author(s):  
K. Yudaeva
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Inflation Targeting ◽  
Exchange Rate Policy ◽  
Institutional Changes ◽  
Crisis Period ◽  
Local Currency ◽  
High Inflation ◽  
Rate Policy ◽  
The Exchange Rate

The level of trust in the local currency in Russia is very low largely because of relatively high inflation. As a result, Bank of Russia during crisis times can not afford monetary policy loosening and has to fight devaluation expectations. To change the situation in the post-crisis period Russia needs to live through a continuous period of low inflation. Modified inflation targeting can help achieve such a result. However, it should be amended with institutional changes, particularly development of hedging instruments.

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