Detail Exchange rate targeting and inflation: Theory and evidence for Indonesia and Thailand Bibliografi Author: Joseph, Charles P. R. ; Husted, Steven L. (Advisor) Topik: ECONOMICS; THEORY|ECONOMICS; FINANCE|ECONOMICS; GENERAL Bahasa: (EN )    ISBN: 0-599-18367-5     Penerbit: University of Pittsburgh Press     Tahun Terbit: 1998     Jenis: Theses - Dissertation Fulltext: 9919297.pdf (0.0B; 2 download) Abstract This study focuses on the inflationary implications of exchange rate targeting policies. In particular, it investigates whether real exchange rate targeting has an inflationary bias relative to a policy of nominal exchange rate targeting. After presenting two versions of a model that spells out the theoretical implications of alternative targeting policies, the dissertation offers an empirical analysis of the models using data from Indonesia and Thailand. The theoretical model that underlies this study is based on Lizondo, (1993). Two different versions of the model are considered. Model I assumes real exchange rate targeting and Model II assumes nominal exchange rate targeting. Attempts by authorities to depreciate the real exchange rate in the first model lead to an increase in the steady state inflation rate, while under the same policy change in the second model leads to a one time increase in the domestic price level, but has no impact on the steady state inflation rate. The higher inflation rate in the first model, however, is accompanied by better external balance performance, while zero steady state inflation condition under the second model leads to no impact on the external balance performance. Using the inflationary implications of the above model, this study attempts to examine whether stronger inflationary bias does exist in a country that targets the real exchange rate as compare to one that fixes the nominal exchange rate. To this end, empirical tests are conducted using data from Indonesia where, until recently, the real exchange rate was targeted and Thailand where the nominal exchange rate was fixed from 1990 to 1997. The empirical tests use the six variable vector autoregression (VAR) methods to derive the impulse response functions brought on by different types of shocks. The six variables used in the VAR include terms of trade, price, exchange rate, interest rate, money, and income. The shocks include a change in the exchange rate target, a money shock, and a terms of trade shock. The analysis focuses on the price responses and responses of other macroeconomic variables such as interest and income. The findings shows that following a devaluation or a positive money shock, the price responses in Indonesia are negligible and therefore contradicts the inflationary bias hypothesis. In addition, following a negative terms of trade shock the price response is significantly positive confirming that the inflationary pressures in Indonesia is partly affected by imported inflation. Under the same types of shocks, brief positive price responses in Thailand support the theoretical model of nominal exchange rate targeting that requires a quick jump in price followed by a reversed movements to its initial level and therefore is consistent with the zero steady state inflation condition. The fixed nominal exchange rate needs consistent macroeconomic policies aimed at maintaining zero steady state inflation rate. If this condition cannot be satisfied, the pegged rule is unsustainable and the authorities would be tempted to devalue the currency. Opini Anda Klik untuk menuliskan opini Anda tentang koleksi ini! Lihat Sejarah Pengadaan  Konversi Metadata   Kembali

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