Author : Sebastian Edwards
Release : 1988
Genre : Business & Economics
Kind : eBook
Book Rating : /5 ( reviews)
Book Synopsis Exchange Rate Misalignment in Developing Countries by : Sebastian Edwards
Download or read book Exchange Rate Misalignment in Developing Countries written by Sebastian Edwards. This book was released on 1988. Available in PDF, EPUB and Kindle. Book excerpt: This article analyzes the theory of equilibrium real exchange rates and defines misalignment as a deviation of the real exchange rate (RER) from its equilibrium level. The role of macroeconomic policies is then analyzed under three alternative nominal exchange rate regimes: predetermined nominal exchange rates; floating nominal rates; and dual or black market nominal exchange rates. This discussion points out how inconsistent macroeconomic policies often lead to real exchange rate misalignment. Corrective measures, including nominal devaluation and several alternative approaches, are then evaluated.