The choice of exchange rate regimes in capital account opening
Read
DownLoad |
| Title | The choice of exchange rate regimes in capital account opening
|
| Author | Cui Hongyu and Wang Aijian |
| Organization | Tianjin University of Finance & Economics |
| Email | cui_hongyu@126.com |
| Key Words | Capital account opening; Exchange rate regime; Interest rate rule |
| Abstract | The choice of exchange rate regimes is one of important questions of the international finance. The paper mainly discussed the relations of capital account opening and the choice of exchange rate regimes by composing New Keynes model. We compared output, rate of inflation and exchange rate fluctuations in different capital account opening velocities, different exchange rate regimes and different money policy rules, and analyzed welfare. The conclusions are as followings. The first one is that the welfare loss is falling off in pace with the exchange rate regime from relative fixed to float. And the welfare loss falls off more slowly during capital account opening velocity increasing. The second one is that the capital account opening improves welfare in any exchange rate regime. And the welfare can have significant improvement during the initial opening period. The final one is that the capital account opening should be simultaneous with exchange rate regime reformation, which would improve welfare. Finally, we provided cases to support our conclusions. |
| Serial Number | WP888 |
| Time | 2015-06-12 |
|