Transparency, reputation, and credibility under floating and pegged exchange rates

• 成果类型: Article
• 署名作者: Herrendorf, B
• 署名单位: University of Warwick; Centre for Economic Policy Research - UK
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/S0022-1996(98)00060-9
• 发表日期: 1999
• 页码: 31-50
• 关键词: credibility; exchange rate regime choice; private information; reputation; TRANSPARENCY

摘要

This paper shows that if the cost of importing foreign inflation and real exchange rate shocks are not too high, then the equilibrium nominal exchange rate regime for a country with a credibility problem is a peg, under which credibility is higher and inflation is lower than under a float. This holds true although devaluations of the pegged rate are assumed to be costless. The reason is that as realized inflation is not perfectly controllable, planned inflation under a float is private information. In contrast, since the exchange rate can be perfectly controlled, pegging resolves the private information problem, is more transparent, and makes reputation more effective. (C) 1999 Elsevier Science B.V. All rights reserved.