Money, Exchange Rates, and OutputGuillermo Calvo, who foresaw the financial crisis that followed the devaluationn of Mexico's peso, has spent much of his career thinking beyond the conventional wisdom. In a quiet and understated way, Calvo has made seminal contributions to several major research areas in macroeconomics, particularly monetary policy, exchange rates, public debt, and stabilization in Latin America and post-communist countries. Money, Exchange Rates, and Output brings together these contributions in a broad selection of the author's work over the past two decades. There are introductions to each section, and an introduction to the entire collection that outlines the connections throughout and survey the current state of macroeconomic theory. Specific issues covered are predetermined exchange rates, currency substitution, domestic public debt and seigniorage, and stabilizing transition economics. |
Contents
Introduction to Part I | 3 |
The Case of the Optimal | 31 |
On the Indeterminacy of Interest Rates and Wages with Perfect | 61 |
Staggered Prices in a UtilityMaximizing Framework | 79 |
Introduction to Part II | 99 |
Some Theoretical Reflections Based on the Case | 127 |
Introduction to Part III | 149 |
A Model of Exchange Rate Determination under Currency | 174 |
The Perils of Sterilization | 269 |
Theory | 275 |
Introduction to Part V | 301 |
On the Costs of Temporary Policy | 325 |
Anticipated Devaluations | 343 |
ExchangeRateBased Stabilisation under Imperfect Credibility | 365 |
Stabilizing Transforming Economies | 391 |
The Role of Credit | 447 |
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Common terms and phrases
analysis Argentina assets assume assumption bank credit bonds budget constraint Calvo capital mobility central bank chapter condition constant consumption converges cost credibility currency substitution debt deficit demand for money denote deposits discussion dollarization domestic currency domestic money Dornbusch economy effect enterprises equation equilibrium equilibrium path example firms fiscal follows foreign currency given Hence hold Hungary implies inconsistency increase indexation individuals inflation rate inflation tax initial International Monetary Fund inventories issues Journal of Political latter liquidity m₁ macroeconomic maximize monetary policy money supply nominal interest rate Obstfeld optimal policy optimum output P₁ perfect foresight period Poland precommitment price level problem programme rate of devaluation rate of inflation rational expectations real exchange rate real interest rate real monetary balances relative price relevant Rodriguez role Section sector seigniorage solution stabilization steady steady-state tion tradables trade utility function variables Végh wages zero