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Book Cover
E-book
Author Towbin, Pascal, author.

Title Limits of floating exchange rates : the role of foreign currency debt and import structure / Pascal Towbin and Sebastian Weber
Published [Washington, D.C.] : International Monetary Fund, ©2011

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Description 1 online resource (52 pages) : illustrations
Series IMF working paper ; WP/11/42
IMF working paper ; WP/11/42.
Summary A traditional argument in favor of flexible exchange rates is that they insulate output better from real shocks, because the exchange rate can adjust and stabilize demand for domestic goods through expenditure switching. This argument is weakened in models with high foreign currency debt and low exchange rate pass-through to import prices. The present study evaluates the empirical relevance of these two factors. We analyze the transmission of real external shocks to the domestic economy under fixed and flexible exchange rate regimes for a broad sample of countries in a Panel VAR and let the responses vary with foreign currency indebtedness and import structure. We find that flexible exchange rates do not insulate output better from external shocks if the country imports mainly low pass-through goods and can even amplify the output response if foreign indebtedness is high
Notes Title from PDF title page (IMF Web site, viewed March 30, 2011)
At head of title: European Department
Bibliography Includes bibliographical references
Subject Foreign exchange rates -- Econometric models
Debts, External -- Econometric models
Imports -- Econometric models
Debts, External -- Econometric models
Foreign exchange rates -- Econometric models
Imports -- Econometric models
Form Electronic book
Author Weber, Sebastian, 1981- author.
International Monetary Fund. European Department, issuing body.
ISBN 1283558181
9781283558181
9781462305124
1462305121