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IMF Staff papers: Volume 37 No. 4
Author:
International Monetary Fund. Research Dept.
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Series:
IMF Staff Papers
Volume/Issue:
Volume 1990: Issue 004
Language:
English
Publication Date:
01 Jan 1990
DOI:
https://doi.org/10.5089/9781451930788.024
ISBN:
9781451930788
ISSN:
1020-7635
Pages:
180
Keywords:
SP; interest rate equation; interest rate; deficit; deficit variable; expenditure competition strategy; yield differential; effects of deficit; Demand for money; Consumption; Exchange rates; Interest rate policy; Labor markets; Europe; Sub-Saharan Africa
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The transition strategy from administratively set interest rates to market rates is discussed. Despite worldwide trends toward financial liberalization, few monetary authorities are prepared to accept as reasonable any interest rate level that is market determined. The paper suggests some helpful indicators to assess the adequacy of interest rates and discusses factors that contribute to a smooth liberalization process. The main conclusion is that interest rate liberalization is not synonymous with laissez-faire policies, but requires the replacement of the administratively set interest rates by indirect monetary management techniques that operate through the market.
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Cover IMF Staff Papers
IMF Staff Papers
ISSN:
1020-7635
Publisher:
International Monetary Fund