The dissertation analyzes the choice of an exchange rate regime for a small open economy indebted in foreign currency, incorporating the financial accelerator. Conventional wisdom suggests that floating regimes should insulate the economy from real shocks…
Contents
1 Introduction
2 Previous Literature
3 Currency Mismatch, Openness, and the Choice of an Exchange Rate Regime
3.1 Model Economy
3.1.1 Model Outline
3.1.2 Firms
3.1.3 Consumers/Workers
3.1.4 Consumers Optimization Problem
3.1.5 Entrepreneurs
3.1.6 Capital Producers
3.1.7 Resource Constraints
3.1.8 Equilibrium
3.2 Nonlinear Effects of Unanticipated Real Price Changes
3.3 Impulse Response Analysis
3.3.1 Uniqueness of Steady State
3.3.2 The Linearized Model
3.3.3 Calibration: Parameter Values and Steady State
3.4 Results
3.4.1 Relatively Open Economies
3.4.2 Relatively Closed Economies
3.5 Policy Implications: “Short-Sharp vs. Long-Mild”
4 Exchange Rate Regime Choice and Country Characteristics: anEmpirical Investigation into the Role of Openness
4.1 Some Evidence: Testing the Model with a Near VAR Approach
4.1.1 Implementation
4.1.2 Descriptive Statistics
4.1.3 Results
4.1.4 Robustness
5 Conclusions and Extensions
A Appendix
A.1 Data and Additional Tables
A.1.1 List of Countries
A.1.2 The Data
Bibliography
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Author: Magud, Nicolas Ernesto
Source: University of Maryland