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Credit Market Interest Rates and Exchange Rate Dynamics

✍ Scribed by Christos Papazoglou; Pavlos Karadeloglou

Publisher
John Wiley and Sons
Year
1997
Tongue
English
Weight
129 KB
Volume
2
Category
Article
ISSN
1076-9307

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✦ Synopsis

This paper examines the effects of both anticipated and unanticipated monetary disturbances in a small open economy by taking into consideration adjustments in the banks' portfolio of earning assets. It primarily focuses on the adjustment of credit market interest rates as well as on that of the exchange rate. In particular, it is shown that the sluggish adjustment of banks' loan portfolio as well as the anticipation of a future policy change can generate perverse short-run behaviour.

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