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A Noteon Dual Foreign Exchange Markets with official Rationing: Predetermined Versus Floating official Exchange Rate

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  • Mr. José Saúl Lizondo

Abstract

This paper examines the relationship between the long run rate of inflation and the allocation of transactions between markets in economies that operate dual exchange market regimes and ration foreign exchange in the official market. It shows that wider access of importers to the official market, and wider access of exporters to the free market, are associated with higher rates of inflation and vice versa. The direction of causality among the various variables, and thus the effects of economic policies, depend on whether the official exchange rate is predetermined or floating.

Suggested Citation

  • Mr. José Saúl Lizondo, 1991. "A Noteon Dual Foreign Exchange Markets with official Rationing: Predetermined Versus Floating official Exchange Rate," IMF Working Papers 1991/031, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:1991/031
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    Cited by:

    1. Minh Tam Bui, 2018. "Causality in Vietnam’s Parallel Exchange Rate System during 2005–2011: Policy Implications for Macroeconomic Stability," Economies, MDPI, vol. 6(4), pages 1-20, December.

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