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A Monetary Model of Exchange Rate and Balance of Payments Adjustment
| Content Provider | Semantic Scholar |
|---|---|
| Author | Makin, Anthony John |
| Copyright Year | 2005 |
| Abstract | This article proposes an alternative monetary model for examining the effects of domestic monetary shocks on the exchange rate and the balance of payments. Using an output-expenditure framework, it shows that domestic monetary shocks can drive a wedge between national expenditure and production and generate incipient current account imbalances with exchange rate and balance of payments implications. Contrary to previous monetary approaches, the model suggests a new chain of causality that runs from domestic money to the exchange rate to the price level, rather than from money to the price level to the exchange rate. It also shows that under fixed rates external adjustment is consistent with money market equilibrium and price level stability. |
| Starting Page | 25 |
| Ending Page | 36 |
| Page Count | 12 |
| File Format | PDF HTM / HTML |
| Volume Number | 10 |
| Alternate Webpage(s) | https://research-repository.griffith.edu.au/bitstream/handle/10072/4623/29614.pdf?isAllowed=y&sequence=1 |
| Alternate Webpage(s) | http://www.economicissues.org.uk/Files/105Makin.pdf |
| Language | English |
| Access Restriction | Open |
| Content Type | Text |
| Resource Type | Article |
