Choosing Exchange Regimes: The Parallels and Contradictions of the Hungarian and Brazilian Experiences Pierre L. Siklos, WLU & Viessmann Centre István.

Slides:

Advertisements

Similar presentations

IT Framework in Hungary Pierre L. Siklos WLU & Viessmann Research Centre Waterloo ON CANADA.

Advertisements

Challenges for the Central Bank in exerting influence on short-term interest rates (the case of Ukraine) Volodymyr Lepushynskyy National Bank of Ukraine.

HELLENIC REPUBLIC MINISTRY OF ECONOMY AND FINANCE Directorate General for Economic Policy Directorate for Macroeconomic Analysis and Forecasting Directorate.

The conduct and instruments of monetary policy June 2005.

Brazil What is Balance of P. C.  When a country that has a large budget deficit, it has difficulty maintaining a fixed exchange rate, ultimately.

The International Monetary System International Finance Dr. A. DeMaskey.

Monetary Policy in Practice: What the journals do not say Mike Wickens Specialist Adviser to the House of Lords Economic Affairs Committee and University.

International Monetary System Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 10.

Exchange Rate Regimes and the Euro MBA W7 Professor Dermot McAleese.

China’s Exchange Rate System after WTO Accession: Some Considerations Jian-Guang Shen, Bank of Finland Institute for Economies in Transition.

Crisis Canice Liu Daniel Lim Eric Pradas Irmo Holslag Jordan Banov.

M ONETARY S YSTEMS Lecture 6 Vallyon Andrea 1. A GENDA 1. Presentation about the money history 2. Exchange rate systems 3. History of International Monetary.

Exchange Rates.

Monetary Policy Rules in Practice: Some International Evidence By Richard Clarida, Jordi Gali & Mark Gertler Presented by Alyaa Ezzat Sept

European Union and Economic and Monetary Union

Dr Marek Porzycki Chair for Economic Policy.  Treaty provisions on the euro  Euro regulations  Derogation and adoption of the euro  Opt-out  Convergence.

© The McGraw-Hill Companies, 2012 Chapter 13: Essential macroeconomic tools The point is that you can’t have it all: A country must pick two out of three.

Exchange Rates Countries choose their exch. rate system:

Successes of the single market program, the EMS and the economic convergence created a favorable economic and political climate for the establishment of.

Chapter 23: Learning Objectives Targets vs. Instruments of Monetary Policy Understanding Monetary Policy: Interest Rate vs. Money Supply Control Central.

Exchange Rate Regimes Lecture 2 IME LIUC 2010.

EXCHANGE RATE REGIMES Julie Harris. Fixed vs. Floating  The exchange rate fluctuates in a narrow range (or not at all) against a base currency over a.

Exchange Rate Policy 1. Just after WW2: high inflation, shortages of goods and foreign exchange Began to use the multiple exchange rate system in 1947.

Dr Marek Porzycki Chair for Economic Policy.  basic concepts  exchange rate regimes  evolution of the international currency system  Special Drawing.

Exchange rates and exchange rate regimes International Finance

International Finance FINA 5331 Lecture 5 History of Monetary Institutions Read: Chapters 2 & 3 Aaron Smallwood Ph.D.

Fixed and Floating Exchange Rates

BULGARIAN ECONOMY ON THE ROAD TO EUROPEAN UNION AND ECONOMIC AND MONETARY UNION IVAN ISKROV GOVERNOR BULGARIAN NATIONAL BANK 14 July 2006 Athens.

 Part 3 It isn't easy!.  Policy makers are very concerned about establishing policy credibility because they believe that it is necessary to prevent.

1 Monetary Policy in Emerging Markets: Key Current IT Themes Leonardo Leiderman Tel-Aviv University OECD and CCBS/Bank.

Distinguished Lecture on Economics in Government Exchange rate Regimes: is the Bipolar View Correct? Stanley Fischer Ahmad Bash P13-18.

Chapter 7 Dealing with Foreign Exchange. LEARNING OBJECTIVES After studying this chapter, you should be able to: 1. understand the determinants of foreign.

Challenges for Inflation Targeting in EM in View of the Current Global Crisis by Leonardo Leiderman Berglas School of Economics, Tel-Aviv University, Israel.

1 CENTRAL BANK OF CHILE Rodrigo Valdés (with José de Gregorio and Andrea Tokman) IADB - MAY 13, 2005 Flexible Exchange Rates with Inflation Targeting in.

1. Definitions The balance of payments is a form of state book keeping, where monetary inflows and outflows are recorded The number of transaction depends.

Chapter 8 Policy Preview. 8-2 Introduction Focus of this chapter is monetary policy Examine how the central bank sets interest rates in order to control.

Inflation Targeting in Emerging Market Economies Arminio Fraga Ilan Goldfajn André Minella Preliminary Version April 2003 Comments are Welcome.

Exchange rate regimes Many countries have some control on the exchange rate Completely flexible exchange rates would means that the rate is left to the.

ECON 511 International Finance & Open Macroeconomy CHAPTER FOUR The Choice of Exchange Rates.

International Finance FINA 5331 Lecture 6: Exchange rate regimes Read: Chapters 2 Aaron Smallwood Ph.D.

Inflation Targeting in Hungary: Lessons from the first 5 years István Hamecz director Magyar Nemzeti Bank Economics and Monetary Policy Directorate 19th.

European Macro-economic Cooperation. Topics Covered Macro-economic cooperation under the Rome Treaty. Autonomy versus cooperation in a Mundell-Fleming.

One Year of Inflation Targeting in Brazil Marvin Goodfriend Federal Reserve Bank of Richmond Central Bank of Brazil Rio de Janeiro July 10-11, 2000.

4. International Monetary System and Foreign Exchange Rate Policy International Financial Services 1 Karel Bruna.

Evolution Of International Monetary System Gold Standard—(Until July 1944) The Bretton Woods System-(Since July 1944 ) Before 15 August 1971 After 15 August.

Special Topics in Economics Econ. 491 Chapter 5: Exchange Rate Policy.

Exchange Rate Regimes: Is the Bipolar view correct? Stanley Fischer Class: International Finance & Open Macroeconomy Dr. Nayef N. Al-shammari Date 5th.

© 2008 Pearson Education Canada18.1 Chapter 18 What Should Central Banks Do? Monetary Policy Goals, Strategy and Tactics.

1 Monetary Policy in Hungary Changing framework of monetary policy –New law on central bank –Shift of the exchange rate regime –Inflation targeting.

Past Crisis Experiences and its Lessons for Asia Pierre L. Siklos Viessmann Centre & BSIA.

1 Rio de Janeiro, May 2001 Banco Central do Brasil Payment Systems and Systemic Risk Reduction: The Brazilian Experience XXXVIII Meeting of Governors.

MLI28C060 - Corporate Finance Seminar 1. Question 1. What are the eight contemporary currency regimes as defined by the IMF? Provide examples where possible.

Domestic Politics and Money. Learning output of the class: - better understanding of the current international monetary system - better understanding.

Autonomous Central Banks in Latin America and their Contributions to the Development of the Financial Market: What are the Lessons? November 2002 Banco.

Monetary Policy in an Adverse Environment: Brazil 2002 Luiz Fernando Figueiredo Ciudad de Mexico October

1 How to Sustain Stability July 2002 Banco Central do Brasil Ilan Goldfajn.

Egypt Case Study.

16 questions on monetary policy asked by Professor Alan Blinder 15th Vice Chairman of the Federal Reserve In office: Jan 31,1996-Feb 1, 2006 Today: Princeton.

International Economics By Robert J. Carbaugh 9th Edition

Economic and Monetary Union

The Economics of European Integration Chapter 12

The Economics of European Integration

19 December 2016 Institute for Trade Studies and Researches(ITSR)

Presentation transcript:

Choosing Exchange Regimes: The Parallels and Contradictions of the Hungarian and Brazilian Experiences Pierre L. Siklos, WLU & Viessmann Centre István Ábel, IMF

Definitions HUNGARY Jan , soft peg with periodic devaluations (22) Mar 1995-Sept 2001 pre-announced crawling peg 4 May Float within ERM II type bands. Adoption of inflation targeting, 12 June 2001 # CRISES: 0?* [ ] BRAZIL 1994 Real plan: asymmetric band (upper limit=parity but no lower limit) March 1995: wide band introduced with inner band defining intervention limits  crawling peg of 0.6% dev per month Jan 1999: failed controlled devaluation followed by a float March-June 1999: inflation targeting with float # CRISES: 4 [ ]

Hungarian Exchange Rate

Changing Inflation Persistence in HUNGARY

Persistence in forecasts and the ER

Causes of Regime Changes and Factors Leading to the Changes HUNGARY Historically weak political and economic institutions An historical preference for “gradualism” An aversion to permitting full domestic adjustment to shocks due to transitional issues Eventually a strong political will for EU/EMU membership (not wildly popular) scheduled for BRAZIL Ditto Federalist structure+threat of military dictatorship delayed reforms Ditto Development of a political consensus toward reform and liberalization of markets (early stages, credibility not yet established)

What Kind of Inflation Targeting Regime? HUNGARY Inflation objectives: 6-8% July 2001; % by 2002; 2% long term goal No contingencies but they are contemplated Targeting horizon in place Adopted 12/June/2001 Inflation report in place (pre- dates adoption of IT) Target is set jointly with government Published inflation forecasts (consensus type) FLEXIBLE IT BRAZIL Inflation objectives: 6-10% in 1999; 4-8% in 2000, 2001; % in 2002; 2-6% in 2003; 1.75%-5.75% in 2004 Targets are “adjusted”: 8.5 in 2003, 5.5 in 2004; based on contingencies 1 st set of targets for 3 yrs, 2 yrs thereafter Adopted 21/6/1999 Inflation report introduced 09/1999 Joint based in proposal by Finance Minister Published inflation forecasts (Copom + consensus) SINGAPOREAN STYLE IT

Taylor rule for Hungary (Fig 3b updated)

The Brazilian Approach to Contingencies Item “Notional”Target Regulated price shocks Inertia ignored Adjusted Target

Government – Central Bank Relations: What The Statutes Say? HUNGARY Organic law Statutorily autonomous but effective autonomy low Persistent govt-CB conflicts Monetary Council sets policy (meets 2/m, 7 to 9 members; created before IT) Pres + 3 VPs plus other members appt by Rep Pres (subject to hearing) CB Act revised fairly frequently (2001 is last revision due to EU membership) No requirement to report to Govt in the event IT fails BRAZIL Organic law No statutory autonomy but effective autonomy has risen since IT introduced Ditto MPC (Copom) created before IT meets 1/m Governor + 7 Dep Govs CB revision planned to give autonomy Open letter required to Fin Minister (21/1/03; 16/1/02)