La Política Monetaria, el Tipo de Cambio Real y el Encaje al Influjo de Capitales: Un Modelo Analítico Simple

This paper presents a simple model based on several equilibrium relationships between the real exchange rate —the relative price of tradable and non tradable goods— and monetary policy, represented by the real interest rate. The domestic equilibrium represents the real exchange rate response directed at eliminating any excess demand in the goods market; the external equilibrium represents the real exchange rate response directed at maintaining a sustainable current account deficit; meanwhile the financial arbitrage condition represents the response that ensures that the expected return of financial capital is the same in domestic and foreign currency. There is only one real interest rate level and one real exchange rate level compatible with global equilibrium; without international capital mobility, monetary policy is fully autonomous to reach this global equilibrium position. The global equilibrium position can be modified by fiscal policy, particularly allowing the equilibrium to be attained at different levels of the real interest rate. Under full international capital mobility, monetary policy effectiveness is limited and a more flexible fiscal policy, that limits the impact of shocks on the equilibrium interest rate, or a reserve requirement on capital flows, that increases the operational range of monetary policy, is needed to preserve global equilibrium. Without them it will be necessary to take as given the external current account deficit levels that international financial markets are willing to accept, and these level can be extremely volatile, moving from the amplitude and easiness that allows for large expansions in domestic expenditure to the tough restrictions that require severe adjustments.