Exchange Market Reform, Inflation, and Fiscal Deficits
IMF Working Papers, August 1, 1995
Source details
- Canonical URL
- Exchange Market Reform, Inflation, and Fiscal Deficits
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Bibliographic details
- Authors: E. Murat Ucer, Pierre-Richard Agénor
- Published: August 1, 1995
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451850062.001
Summary
- Examines the short- and long-run effects of exchange market reform in developing countries.
- Structure of the paper:
- Part one: reviews recent experience of Guyana, India, Jamaica, Kenya, Sierra Leone, and Sri Lanka with exchange market reform.
- Part two: studies analytically the short-run dynamics of the parallel market premium and the money supply upon unification, when the post-reform regime consists of either a pure float or a managed float.
- Part three: discusses the impact of unification on inflation and quasi-fiscal deficits, and identifies a variety of implicit taxes and subsidies that must be taken into account in assessing the longer-run effects of exchange market reform.
Case studies reviewed
- Countries explicitly reviewed:
- Guyana
- India
- Jamaica
- Kenya
- Sierra Leone
- Sri Lanka
Analytical findings and focus
- Short-run dynamics analyzed:
- Parallel market premium upon unification
- Money supply behavior upon unification
- Post-reform exchange rate regimes considered:
- Pure float
- Managed float
Impact on inflation and fiscal/quasi-fiscal deficits
- Discusses:
- Impact of unification on inflation
- Impact of unification on quasi-fiscal deficits
- Identification of implicit taxes and subsidies relevant for longer-run assessment of exchange market reform
Subjects and keywords
- Subject areas:
- Currency markets
- Exchange rate arrangements
- Exchange rates
- Financial markets
- Foreign exchange
- Multiple currency practices
- Keywords include:
- adjustable peg
- cambio market
- central bank
- Currency markets
- exchange market intervention
- exchange market reform
- exchange rate
- Exchange rate arrangements
- exchange rate system
- Exchange rates
- implementation of exchange market reform
- market rate
- money stock
- Multiple currency practices
- net effect of exchange market reform
- parallel exchange rate
- paralllel market premium
- price volatility
- Sub-Saharan Africa
- WP