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Real versus Financial Openness under Alternative Exchange Rate Regimes

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  • Michael Bruno

Abstract

A simple analytical framework is used to consider alternative exchange rate regimes and their bearing on macroeconomic management of a semi- industrial economy. The emphasis is on the implications of different degrees of capital mobility. One of the topics taken up is the conflict between the role of the real exchange rate as a signaling device for long-run resource allocation and the problem of real exchange rate appreciation accompanying the opening up of an economy to short-term capital inflow. Also discussed is the related choice of exchange rate policy as an anti-inflation device.

Suggested Citation

  • Michael Bruno, 1981. "Real versus Financial Openness under Alternative Exchange Rate Regimes," NBER Working Papers 0785, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:0785
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    1. Dornbusch, Rudiger, 1976. "Expectations and Exchange Rate Dynamics," Journal of Political Economy, University of Chicago Press, vol. 84(6), pages 1161-1176, December.
    2. Frenkel, Jacob A. & Rodriguez, Carlos A., 1980. "Exchange Rate Dynamics and Overshooting Hypothesis," Foerder Institute for Economic Research Working Papers 275323, Tel-Aviv University > Foerder Institute for Economic Research.
    3. Calvo, Guillermo A & Rodriguez, Carlos Alfredo, 1977. "A Model of Exchange Rate Determination under Currency Substitution and Rational Expectations," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 617-625, June.
    4. Bruno, Michael & Sussman, Zvi, 1979. "Exchange-rate flexibility, inflation, and structural change : Israel Under Alternative Regimes," Journal of Development Economics, Elsevier, vol. 6(4), pages 483-514, November.
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