External Stability Under Alternative Nominal Exchange Rate Anchors: An Application to the GCC Countries

Author/Editor:

Zubair Iqbal ; S. Nuri Erbas

Publication Date:

January 1, 1997

Electronic Access:

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Summary:

Import and export stability is examined under two alternative nominal exchange rate anchors, the U.S. dollar and the SDR. Stability under the two pegs depends critically on import and export elasticity with respect to exchange rates. The implications of import and export elasticity for an optimal currency basket are also explored. The elasticity estimates for the GCC countries suggest that the SDR peg may not outperform the dollar peg in improving external stability. Nevertheless, switching to some other nominal exchange rate anchor may improve external stability, a possibility that remains to be explored.

Series:

Working Paper No. 1997/008

Subject:

Notes:

This paper was presented at the Eleventh Annual Congress of the European Economic Association, Istanbul, August 21-24, 1996.

English

Publication Date:

January 1, 1997

ISBN/ISSN:

9781451927900/1018-5941

Stock No:

WPIEA0081997

Pages:

36

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