To Peg or Not to Peg?

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Title To Peg or Not to Peg?
Author Makin, Anthony John
Journal Name The Singapore Economic Review
Editor Professor Euston Quah
Year Published 2007
Place of publication Singapore
Publisher Publishing Company World Scientific
Abstract This paper presents a simple framework for analysing the macroeconomic effects of internal and external shocks under polar exchange rate regimes. It highlights the significance of fluctuations in competitiveness and real income for exchange rate policy, revealing that positive (negative) real shocks increase (decrease) national income and strengthen (weaken) the balance of payments and exchange rate. It also shows that, ceteris paribus, pegged exchange rates facilitate real income growth for emerging economies while lowering its variability when exports and productivity are improving and monetary shocks predominate. Alternatively, a floating exchange rate system may be most appropriate for less open advanced economies with relatively stable monetary sectors that frequently experience negative real shocks.
Peer Reviewed Yes
Published Yes
Volume 52
Issue Number 1
Page from 39
Page to 52
ISSN 0217-5908
Date Accessioned 2008-01-14
Date Available 2008-04-13T23:26:31Z
Language en_AU
Research Centre Griffith Asia Institute
Faculty Griffith Business School
Subject Macroeconomic Theory
URI http://hdl.handle.net/10072/17485
Publication Type Journal Articles (Refereed Article)
Publication Type Code c1

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