How do alternative exchange rate regimes operate and how can they be identified?

Anglický jazyk

How do alternative exchange rate regimes operate and how can they be identified?

Na objednávku

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O knihe

Seminar paper from the year 2013 in the subject Economics - Foreign Trade Theory, Trade Policy, grade: 1,7, Johannes Gutenberg University Mainz, course: Seminar International Economic Policy, language: English, abstract: The choice of the exchange rate regime is essentially for a country. According to the
impossible trinity principle a country desires a fixed exchange rate, an autonomous
monetary policy and full capital mobility simultaneously. Unfortunately only two
features at the same time can be realized. A fixed exchange rate has two major
benefits compared to a floating exchange rate. If stable it makes the trade of goods
and assets between countries easier and less costly. Additionally a fixed exchange
rate may improve monetary policy discipline as expansionary monetary policy is
less available to maintain a fixed exchange rate. This may lead to a lower inflation
rate in the long run. But the major disadvantage is that a fixed exchange rate regime
removes the possibility to use monetary policy in a flexible way to deal with
recessions (Abel, Bernanke and Croushore, 2011). Therefore many countries
choose an exchange rate regime between both extreme cases (fixed or flexible
exchange rate regime). In the second chapter I will give some important theoretical
background concerning exchange rate regimes. In particular I will explain different
types of exchange rate regimes and show the difference between 'de jure' and 'de
facto' exchange rate regimes. In the last part of the second chapter I will illustrate
the complex exchange rate regime of the European Union. In the third chapter I will
show the toolbox of a central bank to influence its exchange rate. In the last part of
the third chapter I will show briefly the different instruments using the example of
Switzerland in the recent past. In my conclusion I will try to answer the question
'how can different exchange rate regimes being identified'.