Home » Does Monetary Policy Stabilize the Exchange Rate Following a Currency Crisis? by Ilan Goldfajn
Does Monetary Policy Stabilize the Exchange Rate Following a Currency Crisis? Ilan Goldfajn

Does Monetary Policy Stabilize the Exchange Rate Following a Currency Crisis?

Ilan Goldfajn

Published March 1st 1999
ISBN : 9781281387400
ebook
33 pages
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 About the Book 

Tight money in a given financial crisis can serve either to attract funds or to repel them, depending on the expectations that a rise in interest rates generates. With inelastic expectations, no fear of crisis or of currency depreciation, an increase in the discount rate attracts funds from abroad, and helps provide the cash needed to ensure liquidity- with elastic expectations of change - of falling prices, bankruptcies, or exchange depreciation - raising the discount rate may suggest to foreigners the need to take more funds out rather than in.