The Impact of Monetary Policy on the Bilateral Exchange Rate: Chile versus the United States

 
Author/Editor: Zettelmeyer, Jeromin
 
Publication Date: April 01, 2003
 
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
 
Summary: This paper examines the reaction of the bilateral Ch$/US$ exchange rate to monetary policy actions in Chile and the United States. The approach is to regress the change in the exchange rate following a policy announcement on changes in market interest rates in response to the same announcement. U.S. monetary policy actions that raise the three-month treasury bill rate by 1 percentage point lead to depreciations of the Chilean peso by about 1.5 to 2 percent. The exchange rate also reacts to monetary policy actions in Chile, but the response appears to be smaller, and cannot be estimated with much precision on the available sample.
 
Series: Working Paper No. 03/71
Subject(s): Monetary policy | Interest rates | Exchange rates | Chile | United States

Author's Keyword(s): Monetary Policy | Interest Rates | Exchange Rates
 
English
Publication Date: April 01, 2003
ISBN/ISSN: 1934-7073 Format: Paper
Stock No: WPIEA0712003 Pages: 22
Price:
US$15.00 (Academic Rate:
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