CiNii Books - Money, exchange rates, and output

Guillermo Calvo, who foresaw the financial crisis that followed the devaluation 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 surveys the current state of macroeconomic theory.Calvo, an advocate of the "Chicago school" of rational expectations, uses elements of this approach to understand economic development. While he is a top macroeconomics theorist, his models are always intertwined with policy discussion. He pushes readers to combine knowledge of real world facts -- of institutions, traditions, and culture, in addition to statistics - with theory.One focus of this collection is on the role of credibility in policy-making. Calvo analyzes the origins and macroeconomic consequences of credibility problems. He also shows how monetary and trade theory can fail when the public does not fully believe in policy announcements. A second focus is on equilibrium multiplicity. Calvo uses models with multiple equilibria to identify factors that cause anomalous behavior. He discusses multiple equilibria in abstract terms as well as in terms of its relevance to understanding domestic public debt.Specific issues covered are predetermined exchange rates, currency substitution, domestic public debt and seigniorage, and stabilizing transition economies.

Table of Contents

Building blocks: on the time consistency of optimal policy in a monetary economy
on the flexibility of monetary policy: the case of the optimal inflation tax
on the indeterminacy of interest rates and wages with perfect foresight
staggered prices in a utility-maximizing framework. Part 2 Predetermined exchange rates - basic theory: devaluation: levels versus rates
real exchange rate dynamics with fixed nominal parities: structural change and overshooting
trying to stabilize: some theoretical reflections based on the case of Argentina. Part 3 Currency substitution: from currency substitution to dollarization and beyond: analytical and policy issues
a model of exchange rate determination under currency substitution and rational expectations
currency substitution and the real exchange rate: the utility maximization approach. Part 4 Domestic public debt and seigniorage: servicing the public debt: the role of expectations
indexation and maturity of government bonds: an exploratory model
the perils of sterilization
optimal inflation tax under precommitment: theory and evidence. Part 5 Imperfect credibility - dynamic implications: incredible reforms
on the costs of temporary policy
anticipated devaluations
exchange-rate-based stabilisation under imperfect credibility. Part 6 The new challenge - stabilizing transforming economics: stabilizing a previously centrally planned economy: Poland 1990
output collapse in Eastern Europe: the role of credit
money demand, bank credit, and economic performance in former socialist economies.

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Money, exchange rates, and output

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