Economics, Econometrics and Finance
4 years ago

Central banks find optimal exchange rate stabilization for dollarized economies.

Computing in Economics and Finance
Optimal Exchange Rate Stabilization in a Dollarized Economy with Inflation Targets
Nicoletta Batini, Joseph Pearlman, Paul Levine

Paper Summary

Related papers

Economics, Econometrics and Finance
8 years ago

Exchange rate regimes irrelevant for stabilization policy, labor mobility key

Macroeconomic Analysis
International Finance
Monetary Models
Economics, Econometrics and Finance
8 years ago

Monetary Policy Responses in Crisis: Impact on Exchange Rates and Output

International Finance
Macroeconomic Analysis
Banking Finance
Economics, Econometrics and Finance
8 years ago

Monetary policy in Mexico becomes key anchor for economic stability.

Macroeconomic Analysis
Macroeconomic Trends
International Finance

The article explores how a country can stabilize its exchange rate in a situation where people use both local and foreign currencies. The researchers created a model to study this and found that the optimal policy is to stabilize the exchange rate to a certain extent. This has important implications for countries that aim to control inflation in economies with this kind of currency setup.