Monetary policy targets and the stabilization objective: a source of tension in the EMS

Article Abstract:

Two different monetary regimes in the European Monetary System (EMS) are investigated. These are the asymmetric regime with EMS monetary policy geared towards German targets and the symmetric regime with EMS-wide targets. Deterministic and stochastic simulations of a macroeconomic model are utilized to examine spillovers, adjustment and stabilization in EMS economies. Findings reveal the presence of a substantial trade-off between the two regimes in terms of output and price variations from target. Germany is stable under the asymmetric regime but other EMS economies are more effectively stabilized by a symmetric regime.

European Monetary System, Economic stabilization

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Limited capital markets and the real effects of monetary stabilization policies under alternative exchange rate regimes

Article Abstract:

Monetary stabilization policies create contractionary effects in developing countries. Severely limited capital markets influence financial policies in developing economies. Under such market conditions, contractions hold only under fixed exchange rate systems. The introduction of currency substitution into the economic system will make monetary stabilization expansionary even with fixed exchange rates.

Developing countries

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Monetary policy, exchange rates, and investment in a Keynesian economy

Article Abstract:

The relationship between monetary policy, terms of trade and investment are explored within a partial-equilibrium framework of investment. This technique considers the orientation of investment decision-making to the future and the international trade potential of investment goods. It was found that expansionary fiscal policy within this framework leads to a decline in local investments.

Models, Investments, International trade, Terms of trade

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