Exchange rate policy in developing countries: What is left of the nominal anchor approach?

References

• Kamin , Steven . 1988 . 'Devaluation' external balance and macroeconomic performance: a look at the numbers' . Studies in International Finance , 62 The evidence on the effects of devaluation is well summarised by; Princeton University
   Google Scholar
• Bird , Graham . 1983 . 'should developing countries use currency depreciation as a tool of balance of payments adjustment? A review of the theory and evidence and a guide for the policy maker'' . Journal of Development Studies , July Further reviews which also point in the direction of the effectiveness and efficiency of devaluation include
   Web of Science ®Google Scholar
• Edwards , Sebastian . 1988 . 'Exchange rate misalignment in developing countries' , World Bank Occasional Paper, No 2 John Hopkins University Press .
   Google Scholar
• Killick , Tony . 1984 . “ 'IMF stabilisation programmes' ” . In The Quest for Economic Stabilisation: The IMF and the Third World , Edited by: led , Killick . London : Gower and ODI . Early analysis of the contents of adjustment programmes supported by the International Monetary Fund during the 1970s concluded that devaluation featured as a policy condition in more than half
   Google Scholar
• Edwards . 1989 . 'The International Monetary Fund and the developing countries: a critical evaluation' . Carnegie-Rochester Conference Series on Public Policy , 31 Evidence based on the mid-1980s suggested that devaluation had become a much more frequent component of Fund-backed programmes. In a study of high conditionality programmes Sebastian Edwards, discovered that 79 of them involved devaluation and that those that did not were associated with some institutional constraint such as membership of a monetary union
   Google Scholar
• Aghevli , Bijan , Khan , Mohsin and Montiel , Peter . 1991 . 'Exchange rate policy in developing countries: some analytical issues' , IMF Occasional Papers, No 78 21 Washington DC : IMF . In a review of exchange rate policy the Fund concluded that, 'it is clear that analytical arguments do not support uniform policy prescriptions for exchange rate management'
   Google Scholar
• Bird , Graham . 1987 . International Macroeconomics: Theory, Policy, and Applications , London : Macmillan . Exchange rate policy can also be analysed within the context of the Mundell-Fleming model
   Google Scholar
• Phylaktis , Kate . 1995 . “ 'Exchange rate policies in developing countries' ” . In Monetary Economics in Developing Countries , Edited by: Ghatak , S . London : Macmillan . If the objective is to stabilise domestic output, this model suggests that fixed exchange rates are preferable in the event of domestic monetary shocks such as excess domestic credit creation, since the excess money supply can in effect be exported, whereas flexible exchange rates are preferable as a means of insulating an economy from external shocks. However, the superiority of flexible exchange rates in these circumstances is diminished if there is a low degree of capital mobility. This is a general, though certainly not universal, characteristic of developing countries. It is, for example, more characteristic of sub-Saharan African economies than of the better-off Latin American and East Asian economies
   Google Scholar
• Bird , Graham . 1978 . “ 'Exchange rate policy and LDCS' ” . In Bird, London: The International Monetary System and the Less Developed Countries , London : Macmillan . The conventional arguments for and against different exchange rate policies in the context of developing countries are more fully discussed in; chapter 12
   Google Scholar
• Bird , Graham . 1995 . IMF Lending to Developing Countries: Issues and Evidence , London : Routledge . At the end of the 1970s there were only 20 IMF arrangements currently in effect. By 1990 the number had risen to 51
   Google Scholar
• Bird , Graham and Helwege , Ann . 1997 . 'Can neo-liberalism survive in Latin America' . Millennium: Journal of International Studies , 26 (1) Inflation among developing countries in the Western Hemisphere accelerated from an annual average rate of 770X, over the period 1978-87 to 439 in 1990. In Argentina inflation was 308 1 in 1989 and 2315 in 1990. In Brazil it was 1320 in 1989 and 2740 in 1990. Around this time many Latin American governments embarked on programmes of policy reform based on the so-called Washington consensus. An important component of the reforms was macroeconomic stabilisation designed to reduce inflation; attempt to put Latin American policy reform into historical perspective
   Web of Science ®Google Scholar
• Corden , Max . 1993 . 'Exchange rate policies for developing countries' . Economic Journal , 103
   Web of Science ®Google Scholar
• Fielding , David . 1997 . 'Does the nominal exchange rate regime make a difference to inflation?' , CREDIT Research Paper, No 97118 17
   Google Scholar
• Vegh , Carlos . 1992 . 'stopping high inflation' . IMF Staff Papers , September
   Google Scholar
• Edwards , Sebastian . 1996 . 'Exchange rate anchors, credibility and inertia: a tale of two crises, Chile and Mexico' . American Economic Review , 86
   Web of Science ®Google Scholar
• Sachs , Jeffrey and Zini , Alvaro A Jr . 1996 . 'Brazilian inflation and the Plano Real' . The World Economy , 19
   Web of Science ®Google Scholar
• Schweickert , Rainer . 1994 . 'Exchange rate based stabilisation: lessons from a radical implementation in Argentina' . The World Economy , 17 (2)
   Web of Science ®Google Scholar
• Camdessus , Michel . 1997 . IMF Survey , I December : 372
   Google Scholar
• Killick , Tony . 1995 . IMF Programmes in Developing Countries: Design and Impact , London : Routledge . Early evidence on this is presented in Bird 'Should developing countries'. A more comprehensive survey of the empirical evidence is contained in Kamin, 'Devaluation external balance and macroeconomic performance'. More recent evidence in the context of Fund-backed adjustment programmes is presented by; particularly chapter 3, 'Programme effects: what can we know?'
   Google Scholar
• It is probably not coincidental that in his review of programmes supported by the IMF, Killick finds that the Fund's influence is felt most on the exchange rate, and that the principal impact of programmes is to strengthen the current account of the balance of payments both by promoting exports and constraining imports. Devaluation appears to be an effective tool for reducing current account deficits. Killick, IMF Programmes in Developing Countries.
   Google Scholar
• This, point is made strongly with supporting evidence by Edwards, 'The International Monetary Fund and the developing countries'.
   Google Scholar
• Edwards , Sebastian . 1996 . 'Exchange rates and the political economy of macroeconomic discipline' . American Economic Review , 86 (2)
   Web of Science ®Google Scholar
• Klein , Michael and Marion , Nancy . 1997 . 'Explaining the duration of exchange rate pegs' . Journal of Development Economics , 54
   Web of Science ®Google Scholar