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Monetary and Exchange Rate Dynamics During Disinflation: An Empirical Analysis
Author:
Ms. Lei Zhang
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Mr. A. J Hamann
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https://orcid.org/0000-0002-6363-0398
, and
Mr. Andres F Arias Leiva
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Series:
IMF Working Papers
Volume/Issue:
Volume 2005: Issue 033
Language:
English
Publication Date:
01 Feb 2005
DOI:
https://doi.org/10.5089/9781451860528.001
ISBN:
9781451860528
ISSN:
1018-5941
Pages:
34
Keywords:
WP; cluster analysis; central bank; U.S. dollar
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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Based on the observed behavior of monetary aggregates and exchange rates, we classify inflation-stabilization episodes into two categories: de facto exchange rate-based stabilizations (ERBS) and non-ERBS. Unlike the standard de jure ERBS studied in the literature, de facto ERBS encompass cases in which the central bank intervenes in the foreign exchange market but does not preannounce the use of an exchange rate anchor. The number of the de facto ERBS is twice as large as that of de jure ERBS. Output dynamics during disinflation do not differ significantly between these two groups. We conclude that empirical studies on the effects of exchange rate anchors must seek to disentangle the effects of their announcement from those related to their role in the remonetization process.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 2005: Issue 033