Ensaios sobre credibilidade e política cambial

Abstract

The objective ofthis work is to analyse the credibility of exchange rate regimes in the context of stabilization policies. For this we explicite the trade-off envolved in the choice of the fixed exchange rate: less flexibility can guarantee less inflation at the expense of exchange rate overvaluation. The alternative of exhange rate bands let the policy-maker maintain the commitment to the exchange rate anchor and allows the exchange rate to fluctuate between certain limits, absorbing some exogenous shocks, as for example speculative movements. The empirical evidence suggests that a credible exchange rate band is able to reduce the volatility of the differential between internal and external interest rates, the main mechanism utilized by the monetary authorities in the defense ofthe exchange rate parity.