|
EconStor >
Georg-August-Universität Göttingen >
cege - Centrum für Europa-, Governance- und Entwicklungsforschung, Universität Göttingen >
cege-Diskussionspapiere, Universität Göttingen >
Please use this identifier to cite or link to this item:
http://hdl.handle.net/10419/22163
|
| | |
| Title: | | On the Credibility of Currency Boards  |
| Authors: | | Feuerstein, Switgard Grimm, Oliver |
| Issue Date: | | 2004 |
| Series/Report no.: | | CeGE discussion paper 36 |
| Abstract: | | The paper compares the credibility of currency boards and (standard) pegs. Abandoning a currency board requires a time-consuming legislative process and an abolition will thus be previously expected. Therefore, a currency board solves the time inconsistency problem of monetary policy. However, policy can react to unexpected shocks only with a time lag, thus the threat of large shocks makes the abolition more likely. Currency boards are more credible than standard pegs if the time inconsistency problem dominates. In contrast, standard pegs, that can be left at short notice, are more credible if exogenous shocks are highly volatile and constitute the dominant problem. |
| Subjects: | | monetary policy currency board standard peg credibility time inconsistency problem stochastic purchasing power parity |
| JEL: | | F33 E52 E42 |
| Document Type: | | Working Paper |
| Appears in Collections: | | cege-Diskussionspapiere, Universität Göttingen
|
| |
| | |
Download bibliographical data as:
BibTeX
|
| |
Share on:http://hdl.handle.net/10419/22163
|
Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.
|