Biblioteca Digital de VanguardiaWhy do countries float the way they float?
Countries that are classified as having floating exchange rate systems (or very wide bands) show strikingly different patterns of behavior. They hold very different levels of international reserves and allow very different volatilities to the movements of the exchange rate relative to the volatility...
| Autores principales: | , , |
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| Formato: | artículo científico |
| Lenguaje: | Inglés |
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Universidad Central de Venezuela
2000
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| Materias: | |
| Acceso en línea: | http://www.redalyc.org/articulo.oa?id=36460202 http://biblioteca-repositorio.clacso.edu.ar/handle/CLACSO/43820 |
| _version_ | 1782337025725169664 |
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| author | Ricardo Hausmann Ugo Panizza Ernesto Stein |
| author_facet | Ricardo Hausmann Ugo Panizza Ernesto Stein |
| author_sort | Ricardo Hausmann |
| collection | Repositorio |
| description | Countries that are classified as having floating exchange rate systems (or very wide bands) show strikingly different patterns of behavior. They hold very different levels of international reserves and allow very different volatilities to the movements of the exchange rate relative to the volatility that they tolerate either on the level of reserves or on interest rates. We document these differences and present a model that explains them as the optimal response of a Central Bank that attempts to minimize a standard loss function, in an environment in which firms are credit-constrained and incomplete markets limit their ability to avoid currency mismatches. This model suggests that the difference in the way countries float cold be related to their differing levels of exchange rate pass-through and the differing ability to avoid currency mismatches. We test these implications and find a very strong and robust relationship between the pattern of floating and the ability of a country to borrow internationally in its own currency. We find weaker and less robust evidence on the importance of pass-through to account for differences across countries with respect to their exchange rate/monetary management. |
| format | artículo científico |
| id | clacso-CLACSO43820 |
| institution | CLACSO, Repositorio Digital |
| language | Inglés |
| publishDate | 2000 |
| publisher | Universidad Central de Venezuela |
| record_format | greenstone |
| spelling | clacso-CLACSO438202022-03-17T15:42:20Z Why do countries float the way they float? Ricardo Hausmann Ugo Panizza Ernesto Stein Economía y Finanzas Exchange rate Emerging Markets Dollarization Countries that are classified as having floating exchange rate systems (or very wide bands) show strikingly different patterns of behavior. They hold very different levels of international reserves and allow very different volatilities to the movements of the exchange rate relative to the volatility that they tolerate either on the level of reserves or on interest rates. We document these differences and present a model that explains them as the optimal response of a Central Bank that attempts to minimize a standard loss function, in an environment in which firms are credit-constrained and incomplete markets limit their ability to avoid currency mismatches. This model suggests that the difference in the way countries float cold be related to their differing levels of exchange rate pass-through and the differing ability to avoid currency mismatches. We test these implications and find a very strong and robust relationship between the pattern of floating and the ability of a country to borrow internationally in its own currency. We find weaker and less robust evidence on the importance of pass-through to account for differences across countries with respect to their exchange rate/monetary management. 2000 2022-03-17T15:42:20Z 2022-03-17T15:42:20Z artículo científico http://www.redalyc.org/articulo.oa?id=36460202 http://biblioteca-repositorio.clacso.edu.ar/handle/CLACSO/43820 en http://www.redalyc.org/revista.oa?id=364 Revista Venezolana de Análisis de Coyuntura application/pdf Universidad Central de Venezuela Revista Venezolana de Análisis de Coyuntura (Venezuela) Num.2 Vol.VI |
| spellingShingle | Economía y Finanzas Exchange rate Emerging Markets Dollarization Ricardo Hausmann Ugo Panizza Ernesto Stein Why do countries float the way they float? |
| title | Why do countries float the way they float? |
| title_full | Why do countries float the way they float? |
| title_fullStr | Why do countries float the way they float? |
| title_full_unstemmed | Why do countries float the way they float? |
| title_short | Why do countries float the way they float? |
| title_sort | why do countries float the way they float? |
| topic | Economía y Finanzas Exchange rate Emerging Markets Dollarization |
| url | http://www.redalyc.org/articulo.oa?id=36460202 http://biblioteca-repositorio.clacso.edu.ar/handle/CLACSO/43820 |