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Monetary and Exchange Rate Policies

In: Handbook of Development Economics

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  • Levy Yeyati, Eduardo
  • Sturzenegger, Federico

Abstract

To the extent that they exert a critical influence on the macroeconomic environment, monetary and exchange rate policies (MERP) are relevant for development. However, the analytical economic literature often sees nominal variables as being irrelevant for the real economy, while the multiplicity of channels examined by the empirical literature complicates the task of deriving usable policy implications. Specifically, this chapter attempts to answer the following question: What exchange rate regime and monetary policy framework is more conducive to achieving development policy objectives in a particular country today, and why? We map the direct and indirect links from MERP to key development objectives, and discuss the main findings and how it relates with the empirical evidence to provide an up-to-date perspective of the policy debate and derive criteria for policy choices.

Suggested Citation

  • Levy Yeyati, Eduardo & Sturzenegger, Federico, 2010. "Monetary and Exchange Rate Policies," Handbook of Development Economics, in: Dani Rodrik & Mark Rosenzweig (ed.), Handbook of Development Economics, edition 1, volume 5, chapter 0, pages 4215-4281, Elsevier.
    • Handle: RePEc:eee:devchp:v:5:y:2010:i:c:p:4215-4281
    DOI: 10.1016/B978-0-444-52944-2.00002-1
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    More about this item

    Keywords

    monetary standard; monetary system; monetary policy; policy effects; currency;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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