The stability of currency boards / Kai Stukenbrock.

Format:

Book

Author/Creator:

Stukenbrock, Kai, author.

Series:

CeGE-Schriften, 1617-741X ; 8.

CeGE-Schriften, 1617-741X ; 8

Language:

English

German

Subjects (All):

Currency boards--Case studies.

Currency boards.

Physical Description:

1 online resource (237 pages) : illustrations, charts; digital, PDF file(s).

Edition:

1st ed.

Place of Publication:

Bern Peter Lang International Academic Publishing Group 2018

Frankfurt am Main, Germany: Peter Lang, [2004]

Frankfurt am Main, Germany: Peter Lang, [2018]

Language Note:

English

System Details:

text file

Summary:

The 1990s saw a revival of the currency board system, and proponents have advocated it as an easy-to-set-up exchange rate arrangement providing effective stabilization of the economy. However, the experience of Argentina has highlighted the risks of having a currency board. This study presents both the potential benefits, as well as the risks, of having a currency board by examining the stability of the currency board arrangement and identifying factors affecting the stability. The analysis is based on second-generation currency crisis models, extended to incorporate currency-board specific features and to account for particular aspects often found in currency-board economies.

Contents:

Cover

List of Figures

List of Tables

List of Abbreviations

List of Variables

1 Introduction

2 Currency Boards-An Overview

2.1 Basic Features of a Currency Board

2.1.1 Definition of a Currency Board

2.1.2 Currency Boards vs Central Banks

2.1.3 Flexibility in Design

2.2 Currency Board Characteristics

2.2.1 Credibility and Macroeconomic Stability

2.2.2 The Adjustment Process and Market Flexibility

2.2.3 Anchor Currency Selection-A Theory of Optimum Currency Areas Perspective

2.2.4 Monetary Policy, Lender of Last Resort Support, and Financial Fragility

2.2.5 Fiscal Policy

2.3 Conclusion

3 Past and Present Currency Boards

3.1 History of Currency Boards

3.1.1 General Overview

3.1.2 Foundations

3.1.3 The First Currency Boards (1849-1912)

3.1.4 The West African Currency Board (1913)

3.1.5 The Peak and Decline of the Currency Board System (1913-1974)

3.2 Hong Kong (1983)

3.2.1 Lead-Up to the Currency Board

3.2.2 Currency Board Design

3.2.3 Currency Board Performance

3.3 Argentina (1991-2002)

3.3.1 Lead-Up to the Currency Board

3.3.2 Currency Board Design

3.3.3 The Early Years of the Currency Board and the Tequila Crisis

3.3.4 The Late Years and Currency Board Exit

3.4 Estonia (1992) and Lithuania (1994)

3.4.1 Lead-Up to the Currency Boards

3.4.2 Currency Boards Design

3.4.3 Currency Boards Performance

3.4.4 Accession to the European Union and the European Monetary Union

3.5 Bulgaria (1997)

3.5.1 Lead-Up to the Currency Board

3.5.2 Currency Board Design

3.5.3 Currency Board Performance

3.6 Summary

4 Stability and Instability of Currency Boards-a Theoretical Analysis

4.1 Models of Currency Crises

4.1.1 First and Second Generation Currency Crises Models

4.1.2 Critique of Second Generation Crises Models.

4.1.3 Classification of the Currency Board Crises Model

4.2 The Standard Model

4.2.1 Model Outline

4.2.2 Discretionary Exchange Rate Policy

4.2.3 Fixed Exchange Rate and Time-Inconsistency

4.2.4 Political Cost of Devaluation and Incomplete Information

4.2.5 Possible Equilibria

4.2.5.1 FC equilibrium

4.2.5.2 ZC equilibrium

4.2.5.3 PC equilibria

4.2.5.4 Graphical Representation and Multiple Equilibria

4.2.5.5 Model Parameters and Types of Equilibria

4.2.6 Inter-temporal Linkages and Dynamic Effects

4.2.7 Stability of the Currency Board

4.2.7.1 Gains from Increased Credibility

4.2.7.2 Destabilization through Unemployment

4.2.7.3 Destabilization through a Sequence of PC Equilibria

4.2.7.4 Employment-Decreasing Shocks

4.2.7.5 Conclusion

4.2.8 Loss from Exit

4.3 The Model with Debt

4.3.1 Possible Effects of Foreign-Currency Debt on the Model Economy

4.3.2 Unemployment

4.3.3 Discretionary and Fixed Exchange Rate Policy

4.3.4 Model Equilibria

4.3.5 Graphical Representation and Interpretation of the Modified Model

4.3.6 Model Dynamics and Resilience to Shocks

4.3.7 Loss from Exit and Conclusion

5 Conclusion

5.1 Currency Board Selection

5.2 Currency Board Stability

5.3 The Risks

5.4 Outlook

Appendices

A Currency Boards 1849-2002 Overview

B Currency Board Design Features

C Derivation of Equations

C.1 The Standard Model

C.1.1 Derivation of Devaluation and Loss Equations (4.6) and (4.7)

C.1.2 Proof that (4.9) Greater than (4.11)

C.1.3 Difference Loss Fixed and Loss Discretionary Exchange Rate

C.1.4 Derivation of Equation (4.19), Expected Devaluation

C.1.5 Derivation of Unemployment Equation (4.24)

C.1.6 Derivation of Unemployment Equation (4.28)

C.1.7 Derivation of critical value for c (4.30).

Notes:

Originally presented as the author’s doctoral thesis: Gottingen, 2003.

Includes bibliographical references.

CC BY

Description based on publisher supplied metadata and other sources.

ISBN:

3-631-75699-2

OCLC:

1163833621