The use of the balance of payments as a shock absorber in fixed rate and managed float systems

Joshua Aizenman

Research output: Contribution to journalArticlepeer-review

6 Scopus citations

Abstract

This paper analyzes the use of the balance of payments as a shock absorber in fixed and managed exchange rate regimes. The analysis is conducted in a monetary intergenerational model. It shows that the balance of payments can be used to smooth consumption and raise the welfare of individuals. The paper also justifies the stabilization of consumption as a policy goal, achieved through the balance of payments mechanism.

Original languageEnglish
Pages (from-to)479-486
Number of pages8
JournalJournal of International Economics
Volume11
Issue number4
DOIs
StatePublished - 1 Jan 1981
Externally publishedYes

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