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Exchange Market Reform, Inflation, and Fiscal Deficits
Author:
E. Murat Ucer null

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Pierre-Richard Agénor null

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Series:
IMF Working Papers
Volume/Issue:
Volume 1995: Issue 078
Language:
English
Publication Date:
01 Aug 1995
DOI:
https://doi.org/10.5089/9781451850062.001
ISBN:
9781451850062
ISSN:
1018-5941
Pages:
62
Keywords:
WP; exchange rate; central bank; exchange market reform; money stock; exchange market intervention; adjustable peg; cambio market; implementation of exchange market reform; parallel exchange rate; paralllel market premium; price volatility; exchange rate system; net effect of exchange market reform; market rate; Exchange rates; Currency markets; Exchange rate arrangements; Multiple currency practices; Sub-Saharan Africa
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper examines the short- and long-run effects of exchange market reform in developing countries. The first part reviews the recent experience of Guyana, India, Jamaica, Kenya, Sierra Leone, and Sri Lanka with exchange market reform. The second part studies analytically the short-run dynamics of the parallel market premium and the money supply upon unification, when the post-reform regime consists of either a pure float or a managed float. The third part discusses the impact of unification on inflation and quasi-fiscal deficits, and identifies a variety of implicit taxes and subsidies that must be taken into account in assessing the longer-run effects of exchange market reform.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund