Citation

Discussion Paper Details

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Title: Real Effects of Exchange-Rate-Based Stabilization: An Analysis of Competing Theories

Author(s): Sérgio Rebelo

Publication Date: August 1995

Keyword(s): Fixed Exchange Rates, Inflation and Stabilization

Programme Area(s): International Macroeconomics

Abstract: This paper uses a unified analytical framework to assess, both qualitatively and quantitatively, the relevance of the different hypotheses that have been proposed to explain the real effects of exchange-rate-based stabilizations. The four major hypotheses analysed are: (i) the supply-side effects associated with an inflation decline; (ii) the perception that the exchange rate peg is temporary; (iii) the fiscal adjustments that tend to accompany the peg; and (iv) the existence of nominal rigidities in wages or prices.

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Bibliographic Reference

Rebelo, S. 1995. 'Real Effects of Exchange-Rate-Based Stabilization: An Analysis of Competing Theories'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=1220