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Exchange rate policies

In: The international financial crisis and policy challenges in Asia and the Pacific

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  • Charles Engel

    (University of Wisconsin)

Abstract

Modern macroeconomic theory teaches us new lessons about exchange rates: Currency depreciations or appreciations that change the relative competitiveness of producers in different countries are undesirable from a global perspective if they lead to relative prices that do not reflect the true relative costs of production. From this standpoint, \\"external balance\\" does not mean that trade balances should be zero, but rather that global resources are allocated efficiently. The implications of this insight for the role of the exchange rate in monetary policy are explored here. Some of the traditional arguments for purely floating exchange rates are challenged by this approach. The paper also briefly considers sterilized intervention and comments on the role of international reserves.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Charles Engel, 2010. "Exchange rate policies," BIS Papers chapters, in: Bank for International Settlements (ed.), The international financial crisis and policy challenges in Asia and the Pacific, volume 52, pages 229-250, Bank for International Settlements.
    • Handle: RePEc:bis:bisbpc:52-12
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    4. Slimani, Slah & Ben Allem, Khawla, 2018. "Determinants of real exchange rate misalignment: An empirical analysis for MENA region," MPRA Paper 91605, University Library of Munich, Germany.
    5. Stijn Claessens & M. Ayhan Kose, 2017. "Asset prices and macroeconomic outcomes: A survey," CAMA Working Papers 2017-76, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    6. Slimani, Slah & Ben allem, Khaoula, 2017. "Les déterminants du misalignement du taux de change réel : Analyse empirique pour le cas de la région MENA [Determinants of misalignment of the real exchange rate: An empirical analysis for the MEN," MPRA Paper 81247, University Library of Munich, Germany.
    7. repec:agr:journl:v:2(602):y:2015:i:2(602):p:247-254 is not listed on IDEAS
    8. Yin-Wong Cheung & Wenhao Wang, 2020. "A Jackknife Model Averaging Analysis of RMB Misalignment Estimates," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 11(02), pages 1-45, June.
    9. Yu HSING, 2016. "Determinants of the Hungarian forint/ US dollar exchange rate," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(1(606), S), pages 163-170, Spring.
    10. Eichengreen, Barry & Tong, Hui, 2015. "Effects of renminbi appreciation on foreign firms: The role of processing exports," Journal of Development Economics, Elsevier, vol. 116(C), pages 146-157.
    11. Yu HSING, 2015. "Short-run determinants of the USD/PLN exchange rate and policy implications," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(2(603), S), pages 247-254, Summer.

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