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Global Imbalances, Exchange Rate Pegs and Capital Flows [electronic resource] : A Closer Look / Paul van den Noord = Les déséquilibres mondiaux, l'arrimage des taux de changes et les mouvements de capitaux : examen à la loupe / Paul van den Noord.

Author/Creator:
Noord, Paul van den, author
Publication:
Paris : OECD Publishing, 2011.
Format/Description:
Government document
Book
1 online resource (15 pages)
Series:
OECD Economics Department Working Papers 18151973 ; no.856.
OECD Economics Department Working Papers 18151973 ; no.856
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Other Title:
Les déséquilibres mondiaux, l'arrimage des taux de changes et les mouvements de capitaux examen à la loupe
Subjects:
Economics.
Summary:
This paper presents a stylised model in which either a savings glut or an exchange rate peg in emerging economies drives down the level of interest rates in advanced economies and, when it hits the zero-rate bound, produces a welfare loss. It shows that structural reform in the pursuit of better social protection and financial markets in the emerging economies reduces this negative welfare spillover. An extension of the model with the short-run dynamics of exchange-rate and capital movements shows that adverse asymmetric shocks can lead to a race to the bottom of interest rates. In that case the global coordination of monetary policies is welfare enhancing for both groups of economies. However, the coordinated equilibrium is unstable, which indicates that strong pre-commitment arrangements are required to maintain coordination. This disadvantage diminishes if structural reform is adopted to reduce the volatility in capital flows.
Notes:
Title from title screen (viewed May 1, 2017).
Contributor:
SourceOECD (Online Service)
Access Restriction:
Restricted for use by site license.