An Analysis of the Welfare Implications of Alternative Exchange Rate Regimes: An Intertemporal Model with an Application

Posted: 17 May 2006

See all articles by Andrew Feltenstein

Andrew Feltenstein

Georgia State University - Department of Economics

David E. Lebow

Board of Governors of the Federal Reserve System

Anne Sibert

Birkbeck, University of London; Centre for Economic Policy Research (CEPR)

Abstract

This paper develops a methodology for evaluating the short-run welfare implications of different exchange rate regimes. Heterogeneous, optimizing domestic consumers live for two periods, consume goods and leisure, supply labor, save home and foreign bonds, and demand currency. Firms maximize profits. The home government levies taxes, issues money and bonds and supplies public goods. The foreign country demands imports, supplies exports, and lends to the home country. The theoretical model is estimated for Australia. Counter-factual simulations are carried out. The results suggest that floating was, or would have been, the superior regime for the 1981-1984 period.

Keywords: Exchange Rates, Welfare, Australia

JEL Classification: C68, F31

Suggested Citation

Feltenstein, Andrew and Lebow, David E. and Sibert, Anne, An Analysis of the Welfare Implications of Alternative Exchange Rate Regimes: An Intertemporal Model with an Application. Journal of Policy Modeling, Vol. 10, No. 4, pp. 611-629, Winter 1988, Available at SSRN: https://ssrn.com/abstract=902601

Andrew Feltenstein (Contact Author)

Georgia State University - Department of Economics ( email )

P.O. Box 3992
Atlanta, GA 30302-3992
United States
404-4130093 (Phone)

David E. Lebow

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States
202-452-3057 (Phone)
202-452-3819 (Fax)

Anne Sibert

Birkbeck, University of London ( email )

Malet Street
London, WC1E 7HX
United Kingdom
+44 20 7631 6420 (Phone)
+44 20 7631 6416 (Fax)

HOME PAGE: http://www.ems.bbk.ac.uk/faculty/sibert/index_html

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
445
PlumX Metrics