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Exchange rate regimes and macroeconomic stabilization in a developing country

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  • David H. Howard

Abstract

Argentina's Austral Plan is used as a point of departure for the investigation of the role of exchange rate policy in a macroeconomic stabilization program for a developing country. A model of a country like Argentina is developed and the relationship between the exchange rate and macroeconomic policy is derived. The paper next explores the implementing of alternative macroeconomic policy strategies involving exchange rates. The framework provides a rough way of quantifying and making operational what is meant by \"appropriate\" fiscal and monetary policy in the context of a stabilization program. Finally, some practical aspects of implementing an exchange-rate-oriented macroeconomic stabilization program are discussed.

Suggested Citation

  • David H. Howard, 1987. "Exchange rate regimes and macroeconomic stabilization in a developing country," International Finance Discussion Papers 314, Board of Governors of the Federal Reserve System (U.S.).
    • Handle: RePEc:fip:fedgif:314
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    References listed on IDEAS

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    2. Barro, Robert J. & Gordon, David B., 1983. "Rules, discretion and reputation in a model of monetary policy," Journal of Monetary Economics, Elsevier, vol. 12(1), pages 101-121.
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    6. Sachs, Jeffrey, 1987. "The Bolivian Hyperinflation and Stabilization," American Economic Review, American Economic Association, vol. 77(2), pages 279-283, May.
    7. Dale Henderson, 1984. "Exchange Market Intervention Operations: Their Role in Financial Policy and Their Effects," NBER Chapters, in: Exchange Rate Theory and Practice, pages 359-406, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Neil R. Ericsson & Steven B. Kamin, 2008. "Constructive data mining: modeling Argentine broad money demand," International Finance Discussion Papers 943, Board of Governors of the Federal Reserve System (U.S.).
    2. Neil R. Ericsson & Steven B. Kamin, 1993. "Dollarization in Argentina," International Finance Discussion Papers 460, Board of Governors of the Federal Reserve System (U.S.).
    3. Jason Nassios & James A. Giesecke & Peter B. Dixon & Maureen T. Rimmer, 2016. "Superannuation and Macroeconomic Growth and Stability," Centre of Policy Studies/IMPACT Centre Working Papers g-267, Victoria University, Centre of Policy Studies/IMPACT Centre.
    4. Kamin, Steven B. & Ericsson, Neil R., 2003. "Dollarization in post-hyperinflationary Argentina," Journal of International Money and Finance, Elsevier, vol. 22(2), pages 185-211, April.

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