Should the exchange rate be a shock absorber?

• 成果类型: Article
• 署名作者: Devereux, MB
• 署名单位: University of British Columbia
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/S0022-1996(03)00050-3
• 发表日期: 2004
• 页码: 359-377
• 关键词: Exchange rate; shock absorber; financial markets; Wage stickiness

摘要

This paper examines the welfare case for the exchange rate as a shock absorber, cushioning an economy in face of shocks to world demand for its good. We provide an example in which, although the exchange rate acts perfectly as a shock absorber, stabilizing output around the natural rate, and eliminating the impact of nominal rigidities, it may in fact be better to prevent the exchange rate from adjusting at all. The explanation for this is that, with incomplete international financial markets, the natural rate is inefficient-, it does not respond enough to demand shocks. While fixing the exchange rate increases the volatility of consumption, the pro-cyclical nature of monetary policy under a fixed exchange rate allows for a more efficient composition of consumption between home and foreign goods. Furthermore, for the shocks examined, a welfare maximizing monetary rule always dampens exchange rate volatility relative to that of a free float, and in some cases may imply a fixed exchange rate. (C) 2004 Elsevier B.V. All rights reserved.