|Generate QR code
Open Access
Subscription Access
Real exchange rate targeting
https://doi.org/10.32609/0042-8736-2016-5-44-65
Abstract
Developing countries typically exhibit a high degree of macroeconomic variablesinstability. This feature is particularly evident as regards the volatility of the real exchange rate. The concern with these destabilizing effects generatedby real exchange rate instability has prompted some developing countries to adopt real exchange rate targeting since the late 60’s. However, this policy produces an inflation bias. This paper reviews economic literature on theoretical frameworks and empirical evidences about effects of real exchange rate targeting.
About the Authors
S. Moiseev
The Bank of Russia
Russian Federation
Russian Federation
I. Pantina
The Bank of Russia
Russian Federation
Russian Federation
References
1. Sosunov K. A., Zamulin O. A. (2007). The inflationary consequences of real exchange rate targeting via accumulation of reserves. Cas Working Paper Series, No. WP13/2007/17. (In Russian).
2. Sosunov K. A., Ushakov N. Yu. (2009). A determination of real exchange rate of Russian ruble and an estimate of long-term targeting of real exchange rate policy. Zhurnal Novoi Ekonomicheskoi Assotsiatsii, No. 3—4, pp. 97—121. (In Russian).
3. Adams C., Gros D. (1986). Consequences of real exchange rate rules for inflation: Some illustrative examples. IMF Staff Papers, No. 3, pp. 439-476.
4. Athukorala P.-C., Rajapatirana S. (2003). Capital inflows and the real exchange rate: A comparative study of Asia and Latin America. The World Economy, Vol. 26, No. 4, pp. 613-637.
5. Bahmani-Oskooee M., Hegerty S., Kutan A. (2008). Do nominal devaluations lead to real devaluations? Evidence from 89 countries. International Review of Economics & Finance, Vol. 17, No. 4, pp. 644-670.
6. Calvo G., Vegh C., Reinhart C. (1995). Targeting the real exchange rate: Theory and evidence. Journal of Development Economics, Vol. 47, No. 1, pp. 97-133.
7. Cavoli T., Wilson J. (2015). Corruption, central bank (in)dependence and optimal monetary policy in a simple model. Journal of Policy Modeling, Vol. 37, No. 3, pp. 501-509.
8. Cordero J. (2008). Economic growth under alternative monetary regimes: Inflation targeting vs real exchange rate targeting. International Review of Applied Economics, Vol. 22, No. 2, pp. 145-160.
9. Cravino J., Levchenko A. (2015). The distributional consequences of large devaluations. RSIE Discussion Paper, No. 648.
10. Domac I., Shabsigh G. (1999). Real exchange rate behavior and economic growth: Evidence from Egypt, Jordan, Morocco, and Tunisia. IMF Working Paper, No. 40.
11. Dornbusch R. (1982). PPP exchange-rate rules and macroeconomic stability. Journal of Political Economy, Vol. 90, No. 1, pp. 158-165.
12. Edwards S. (1988). Real and monetary determinants of real exchange rate behavior: Theory and evidence from developing countries. NBER Working Paper, No. 2721.
13. IMF (2006). How does capital account liberalization affect economic growth? Transcript of an IMF Center Economic Forum. Washington, DC, November 10.
14. IMF (2014). International Financial Statistics Yearbook. Exchange rates and exchange rate arrangements. Washington, DC.
15. Klau M., Fung S. (2006). The new BIS effective exchange rate indices. BIS Quarterly Review, March, pp. 51-65.
16. Klein M., Marion N. (1994). Explaining the duration of exchange-rate pegs. NBER Working Paper, No. 4651.
17. Lizondo J. (1993). Real exchange rate targeting under imperfect asset substitutability. IMF Working Paper, No. 38.
18. Menoncin F., Tronzano M. (2007). Optimal real exchange rate targeting: A stochastic analysis. Revue économique, Vol. 58, No. 4, pp. 807-840.
19. Montiel P., Ostry J. (1991a). Macroeconomic implications of real exchange rate targeting in developing countries. IMF Working Paper, No. 29.
20. Montiel P., Ostry J. (1991b). Real exchange rate targeting under capital controls: Can money provide a nominal anchor? IMF Working Paper, No. 68.
21. Penati A. (1987). Monetary versus real exchange rate targets when capital mobility is limited. Economics Letters, Vol. 23, No. 4, pp. 381-386.
22. Porcile G., de Souza A., Viana R. (2011). External debt sustainability and policy rules in a small globalized economy. Structural Change and Economic Dynamics, Vol. 22, No. 3, pp. 269-276.
23. Ripoll M. (2005). Real exchange rate targeting, macroeconomic performance, and sectoral income distribution in developing countries. Journal of International Trade and Economic Development, Vol. 14, No. 2, pp. 167-196.
24. Treichel V. (1997). Broad money demand and monetary policy in Tunisia. IMF Working Paper, No. 22.
25. Turner P., Van’t dack J. (1993). Measuring international price and cost competitiveness. BIS Economic Papers, No. 39.
26. Uribe M. (2002). Real exchange rate targeting and macroeconomic instability. NBER Working Paper, No. 9294.
Review
For citations:
Moiseev S., Pantina I. Real exchange rate targeting. Voprosy Ekonomiki. 2016;(5):44-65. (In Russ.) https://doi.org/10.32609/0042-8736-2016-5-44-65
Views:
787
Email this article 
