Resource Center

Advanced Search
Technical Papers
Working Papers
Research Memoranda
GTAP-L Mailing List
CGE Books/Articles
Important References
Submit New Resource

GTAP Resources: Resource Display

GTAP Resource #1852

"Economic Consequences of Alternative Exchange Rate and Monetary Policy Regimes in Canada"
by Macklem, Tiff, Patrick Osakwe, Hope Pioro and Lawrence Schembri

This paper uses a stochastic Dynamic General Equilibrium Model to analyze the economic and welfare consequences for Canada of two alternative exchange rate and monetary policy rules: a flexible exchange rate regime with a price-level target and a permanently fixed exchange rate regime, which might occur with the formation of a North American monetary union. The model is calibrated to Canadian data and then simulated to determine the impact of term-of-trade shocks on key macroeconomic variables under the two regimes. The main finding of the paper is that employment, output, and consumption are much more volatile under a fixed exchange rate. Because agents are risk-averse, this volatility has significant welfare costs. The study also shows that transactions costs would have to be implausibly high and agents almost risk neutral for the welfare advantage of a flexible exchange rate to disappear.

Resource Details (Export Citation) GTAP Keywords
Category: Other CGE Application
Status: Not published
By/In: Revisiting the Case for Flexible Exchange Rates
Date: 2001
Created: Osakwe, P. (7/8/2005)
Updated: Dimaranan, B. (7/8/2005)
Visits: 1,670
No keywords have been specified.

If you have trouble accessing any of the attachments below due to disability, please contact the authors listed above.

Public Access
  File format GTAP Resource 1852   (123.6 KB)   Replicated: 0 time(s)

Restricted Access
No documents have been attached.

Special Instructions
No instructions have been specified.

Comments (0 posted)
You must log in before entering comments.

No comments have been posted.