PPT-Exchange Rate Regimes

Andrew K Rose Visiting NormanHoublon Fellow August 2010 1 Three Questions Past What do We Know about Exchange Rate Regimes Historically Rose Fixed Floating and Flaky Present How did Different Exchange Rate Regimes do in the Great Recession. Two polar cases. Fixed (pegged) exchange rates. CB buys or sells reserves to maintain a set price of foreign exchange. Flexible exchange rates. CB does not intervene in market for foreign exchange. and . Slide Set 1. Introduction to exchange rates and exchange rate regimes. Defining the Exchange Rate. The exchange rate is the price of a unit of one currency in terms of another currency. . For example, the U.S. dollar exchange rate for euros is . 4/2/2012. Unit 3: Exchange Rates. Exchange Rate Regimes. fixed exchange rate . –. a currency's value is matched to the value of another single currency or to a commodity (e.g., gold). floating exchange rate . Prof.J.Frankel. Lecture 21: . Exchange Rate Regimes. ITF220 Prof.J.Frankel. What exchange rate regimes do . countries . choos. e. ?. Classification of exchange rate regimes. What regimes . should. countries . n, monetary regime We thank Jessica Wesley for research assistance. The views presented in this paper are Exits from pegged exchange rate regimes have often been accompanied by crises and severe decl Slide Set 2. Introduction to exchange rates and exchange rate regimes. Defining the Exchange Rate. The exchange rate is the price of a unit of one currency in terms of another currency. . For example, the U.S. dollar exchange rate for euros is . F. rankel, . Harvard University. Comments on . “Exchange Rate Management. & Crisis Susceptibility: . A Reassessment,” . by . Atish. . Ghosh. , Jonathan . Ostry. & . Mahvash. . Qureshi. Exchange Rate Regimes. ITF220 Prof.J.Frankel. What exchange rate regimes do . countries . choos. e. ?. Classification of exchange rate regimes. What regimes . should. countries . choose?. 2. Advantages . Fixed vs. Floating. The exchange rate fluctuates in a narrow range (or not at all) against a base currency over a sustained period of time. . Government action is needed to maintain the exchange rate.. Exchange Rate Regimes. ITF220 Prof.J.Frankel. What exchange rate regimes do . countries . choos. e. ?. Classification of exchange rate regimes. What regimes . should. countries . choose?. 2. Advantages . Comments on . “Exchange Rate Management. & Crisis Susceptibility: . A Reassessment,” . by . Atish. . Ghosh. , Jonathan . Ostry. & . Mahvash. . Qureshi. IMF ARC, Nov.. . 7, 2013. Reassessment of what Stan Fischer in . EXCHANGE. . Students. Does the exchange rate regime impact the number of students who choose to go abroad for university?. Question . Fixed . exchange rate regimes will . have more students studying abroad than floating.. the Mundell-Fleming model. Case 1. Flexible exchange rate regime. Monetary policy effectiveness. (Changes in money supply). An increase in money supply (M/P=l. 1. Y-l. 2. i eq.1.6) reduces the local interest rate and increases investments and output (eq. 1.1 and 1.3). Since the model represents an open economy, the local interest rate is now lower than the global interest rate. The UIP is no longer verified (. Panel . on Monetary Policy,. Conference . on Monetary Policy. and Financial Stability in . Emerging . Markets,. NBER & Central Bank of the Republic . of . Turkey,. Istanbul, Turkey, June 13-14, 2014.