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https://hdl.handle.net/10419/18724
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DC Field | Value | Language |
---|---|---|
dc.contributor.author | Mundaca, B. Gabriela | en |
dc.contributor.author | Strand, Jon | en |
dc.date.accessioned | 2009-01-28T15:52:26Z | - |
dc.date.available | 2009-01-28T15:52:26Z | - |
dc.date.issued | 2004 | - |
dc.identifier.uri | http://hdl.handle.net/10419/18724 | - |
dc.description.abstract | We derive the optimal exchange rate policy for a small open economy subject to terms-oftradeshocks. Firm owners and workers are risk averse but workers more so. Wages are givenor partially indexed in the short run, and capital markets are imperfect. The government setsthe exchange rate to allocate risk between workers and owners. With less risk-averse firms,and greater difference in risk aversion between workers and firms, the optimal exchange rateshould vary little with pure terms-of-trade shocks but more with general shocks to prices.Optimal exchange rate variation is greater with indexed wages, but is smaller when firmsbehave monopolistically and when wage taxes (profit taxes) change procyclically(countercyclically) with export prices (import prices). The model gives policy rules fordetermining optimal variations of the exchange rate, and indicates when it is, and is not,optimal to join a currency union with trading partners, implying zero exchange rate variation. | en |
dc.language.iso | eng | en |
dc.publisher | |aCenter for Economic Studies and ifo Institute (CESifo) |cMunich | en |
dc.relation.ispartofseries | |aCESifo Working Paper |x1361 | en |
dc.subject.jel | F41 | en |
dc.subject.jel | F33 | en |
dc.subject.jel | F31 | en |
dc.subject.ddc | 330 | en |
dc.subject.keyword | currency band | en |
dc.subject.keyword | monetary union | en |
dc.subject.keyword | price volatility | en |
dc.subject.keyword | optimal risk allocation | en |
dc.subject.stw | Wechselkurspolitik | en |
dc.subject.stw | Target Zone | en |
dc.subject.stw | Risiko | en |
dc.subject.stw | Allokation | en |
dc.subject.stw | Risikoaversion | en |
dc.subject.stw | Preisniveaustabilität | en |
dc.subject.stw | Währungsunion | en |
dc.subject.stw | Theorie | en |
dc.title | A risk allocation approach to optimal exchange rate policy | - |
dc.type | Working Paper | en |
dc.identifier.ppn | 477509207 | en |
dc.rights | http://www.econstor.eu/dspace/Nutzungsbedingungen | en |
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