TY - BOOK ID - 84538628 TI - Credibility and Exchange Rate Management in Developing Countries PY - 1991 SN - 1462382258 1455215201 1281355763 9786613779380 1455268569 PB - Washington, D.C. : International Monetary Fund, DB - UniCat KW - Foreign Exchange KW - Inflation KW - Development Planning and Policy: Trade Policy KW - Factor Movement KW - Foreign Exchange Policy KW - Price Level KW - Deflation KW - Currency KW - Foreign exchange KW - Macroeconomics KW - Exchange rates KW - Conventional peg KW - Real exchange rates KW - Exchange rate policy KW - Prices KW - United Kingdom UR - https://www.unicat.be/uniCat?func=search&query=sysid:84538628 AB - The paper examines the role of credibility in the conduct of exchange rate policy in developing countries, The analysis is based on a model in which policymakers are concerned about inflation and external competitiveness. Price setters in the nontraded goods sector of the economy adjust prices in reaction to anticipated fluctuations in the domestic price of tradable goods. This type of model is showm to generate a “devaluation bias” which undermines the credibility of a fixed exchange rate. The effect of reputational factors, signaling considerations, and joining a currency union as possible solutions to this bias is examined. ER -