Exchange Rate Preannouncement and Keynesian Unemployment

Authors

  • Martín Rama Centro de Investigaciones Económicas (CINVE-Uruguay)

Keywords:

exchange rate preannouncement, active crawling-peg, stabilization policy, Keynesian unemployment, disequilibrium model, non-traded goods

Abstract

In 1978, Argentina, Chile and Uruguay adopted a stabilization policy based on exchange rate preannouncement. The aim of this paper is to study the consequences of such a policy from a analytical point of view. The paper stands on a two-sector disequilibrium model, in which there is a price level inertia in the labor market as well as in the non-traded goods market. The main stylized facts are reproduced. It is shown, particularly, that the exchange rate preannouncement had to give rise to an economic boom first, and a keynesian unemployment situation later.

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References

Corbo, V. (1985). Reforms and macroeconomic adjustments in Chile during 1974-1984. World Development, 13(8), 893–916. https://doi.org/10.1016/0305-750x(85)90074-9

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Published

1986-04-30

How to Cite

Rama, M. (1986). Exchange Rate Preannouncement and Keynesian Unemployment. Economic Analysis Review, 1(1), 17–32. Retrieved from https://www.rae-ear.org/index.php/rae/article/view/306

Issue

Vol. 1 No. 1 (1986)

Section

Articles

License

Copyright (c) 1986 Martín Rama

Creative Commons License

This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

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