Peter Montiel - Academia.edu (original) (raw)
Papers by Peter Montiel
Cambridge University Press eBooks, Apr 10, 2003
Social Science Research Network, 2001
The views expressed in this Working Paper are those of the author(s) and do not necessarily repre... more The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMP or IMP policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate. WP/OllI70 Following the 1997-98 financial turmoil, crisis countries in Asia moved toward either floating or fixed exchange rate systems, reinforcing the bipolar view of exchange rate regimes and the "hollow middle" hypothesis. But some academics have claimed that the crisis countries' policies have been similar in the post-and pre-crisis periods. This paper analyzes the evidence and concludes that, except for Malaysia, which adopted a hard peg and imposed capital controls, the other crisis countries are floating more than before, though less than "real" floaters do. Further, the crisis countries' policies during the post-crisis period can be justified on second-best arguments.
Social Science Research Network, 1991
This is a working paper and the author would welcome any comments on the present text. Citations ... more This is a working paper and the author would welcome any comments on the present text. Citations should refer to an unpublished manuscript, mentioning the author and the date of issuance by the International Monetary Fund. The views expressed are those of the author and do not necessarily represent those of the Fund.
Princeton University Press eBooks, Jun 23, 2015
Economic Structure and Aggregate Accounts T his chapter describes the structural features that, i... more Economic Structure and Aggregate Accounts T his chapter describes the structural features that, in our view, distinguish most developing countries from the textbook industrial-country model, and provides an overview of some general analytical features of developingcountry macroeconomic models. It takes a model-based perspective, focusing on the general structure of macroeconomic models for developing countries, including the accounting framework, the level of commodity disaggregation, and the particular role of labor markets. Chapter 2 will focus on specific components of macroeconomic models, examining evidence on the properties of private behavioral functions in developing nations. This chapter is divided into four sections. Section 1.1 identifies the distinctive aspects of development macroeconomics. It also documents a range of regularities in macroeconomic fluctuations for developing countries. Section 1.2 sets out a general accounting framework consisting essentially of budget constraints for each type of agent typically appearing in a developing-country macroeconomic model, and defines several concepts that will prove useful later on. In Section 1.3, we consider how economic structure can be imposed on these accounting relationships by reviewing three alternative approaches to commodity disaggregation in an open economy: the Mundell-Fleming model, the "dependent economy" model, and a three-good structure distinguishing exportables, importables, and nontraded goods. Almost all macroeconomic models for developing countries rely on some variant of one of these approaches. Each of these three production structures is analyzed in both classical and Keynesian modes. Section 1.4 looks at the labor market, a market that plays a central analytical role in all macroeconomic models, and the functioning of which is widely accepted to depend on country-specific institutional factors, both in the industrial-and developing-country contexts. As emphasized in Section 1.3, labor markets play a key role in determining the properties of an economy's short-run aggregate supply 12
VAR methods suggest that the monetary transmission mechanism may be weak and unreliable in low-in... more VAR methods suggest that the monetary transmission mechanism may be weak and unreliable in low-income countries (LICs). But are structural VARs identified via short-run restrictions capable of detecting a transmission mechanism when one exists, under research conditions typical of these countries? Using small DSGEs as data-generating processes, we assess the impact on VAR-based inference of short data samples, measurement error, high-frequency supply shocks, and other features of the LIC environment. The impact of these features on finite-sample bias appears to be relatively modest when identification is valid-a strong caveat, especially in LICs. However, many of these features undermine the precision of estimated impulse responses to monetary policy shocks, and cumulatively they suggest that "insignificant" results can be expected even when the underlying transmission mechanism is strong.
Social Science Research Network, 1990
In many developing countries the financial system is characterized by the absence of organized ma... more In many developing countries the financial system is characterized by the absence of organized markets for securities and equities, by capital controls, and by legal ceilings on bank borrowing and lending rates, a situation which gives rise to parallel markets for foreign exchange and informal loan markets. This paper analyzes how changes in monetary policy instruments (bank credit, administered interest rates, required reserve ratios, and intervention in the parallel exchange market) are transmitted to domestic aggregate demand in a financially-repressed economy. Such an analysis is necessary to understand how the move to a more market-oriented system would affect the economy in the short run.
International Monetary Fund eBooks, 1998
Social Science Research Network, Jan 3, 1989
In pursuing a steady-state reserve target, policymakers in small open economies can resort to dev... more In pursuing a steady-state reserve target, policymakers in small open economies can resort to devaluation or to temporary increases in public saving. This paper contrasts the dynamic implications of these alternative policies in a model with optimizing agents who possess perfect foresight. In general, the private sector cannot be insulated from the effects of the government`s reserve-accumulation policies. The dynamic effects of devaluation depend on the fiscal policy rule in effect. In contrast to devaluation, the "equivalent" fiscal policies imply discontinuities in private consumption and temporary tax increases may cause key macroeconomic variables to overshoot their steady-state values.
Cambridge University Press eBooks, Apr 29, 2011
As shown in Chapter 1, most emerging-market and developing economies maintain some type of offici... more As shown in Chapter 1, most emerging-market and developing economies maintain some type of officially determined exchange rate regime. Accordingly, the benchmark model of Part 2 was built on the assumption of a fixed exchange rate. However, as also shown in Chapter 1, a substantial number of emerging-market economies – and a few developing economies as well – operate exchange rate regimes that are best described as managed or free floats. To examine how the economy behaves in the short run under this alternative exchange rate regime, in this chapter we will revisit the benchmark model of Part 2 and investigate how it would need to be modified to describe an economy with floating exchange rates. This extension will not only allow us to study the macroeconomics of some important emerging economies but will also give us a frame of reference for analyzing optimal exchange rate regimes in Chapter 18. The structure of this chapter is as follows: the first section spells out the analytical framework that we will use to study a floating exchange rate economy. Section II takes the first step in analyzing such an economy by examining how the equilibrium nominal exchange rate is determined when the central bank does not intervene in the foreign exchange market. Section III assembles the complete short-run model under floating rates, building on the groundwork laid out in the two preceding sections.
Cambridge University Press eBooks, Apr 29, 2011
Edward Elgar Publishing eBooks, Sep 30, 2008
Cambridge University Press eBooks, Apr 10, 2003
Social Science Research Network, 2001
The views expressed in this Working Paper are those of the author(s) and do not necessarily repre... more The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMP or IMP policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate. WP/OllI70 Following the 1997-98 financial turmoil, crisis countries in Asia moved toward either floating or fixed exchange rate systems, reinforcing the bipolar view of exchange rate regimes and the "hollow middle" hypothesis. But some academics have claimed that the crisis countries' policies have been similar in the post-and pre-crisis periods. This paper analyzes the evidence and concludes that, except for Malaysia, which adopted a hard peg and imposed capital controls, the other crisis countries are floating more than before, though less than "real" floaters do. Further, the crisis countries' policies during the post-crisis period can be justified on second-best arguments.
Social Science Research Network, 1991
This is a working paper and the author would welcome any comments on the present text. Citations ... more This is a working paper and the author would welcome any comments on the present text. Citations should refer to an unpublished manuscript, mentioning the author and the date of issuance by the International Monetary Fund. The views expressed are those of the author and do not necessarily represent those of the Fund.
Princeton University Press eBooks, Jun 23, 2015
Economic Structure and Aggregate Accounts T his chapter describes the structural features that, i... more Economic Structure and Aggregate Accounts T his chapter describes the structural features that, in our view, distinguish most developing countries from the textbook industrial-country model, and provides an overview of some general analytical features of developingcountry macroeconomic models. It takes a model-based perspective, focusing on the general structure of macroeconomic models for developing countries, including the accounting framework, the level of commodity disaggregation, and the particular role of labor markets. Chapter 2 will focus on specific components of macroeconomic models, examining evidence on the properties of private behavioral functions in developing nations. This chapter is divided into four sections. Section 1.1 identifies the distinctive aspects of development macroeconomics. It also documents a range of regularities in macroeconomic fluctuations for developing countries. Section 1.2 sets out a general accounting framework consisting essentially of budget constraints for each type of agent typically appearing in a developing-country macroeconomic model, and defines several concepts that will prove useful later on. In Section 1.3, we consider how economic structure can be imposed on these accounting relationships by reviewing three alternative approaches to commodity disaggregation in an open economy: the Mundell-Fleming model, the "dependent economy" model, and a three-good structure distinguishing exportables, importables, and nontraded goods. Almost all macroeconomic models for developing countries rely on some variant of one of these approaches. Each of these three production structures is analyzed in both classical and Keynesian modes. Section 1.4 looks at the labor market, a market that plays a central analytical role in all macroeconomic models, and the functioning of which is widely accepted to depend on country-specific institutional factors, both in the industrial-and developing-country contexts. As emphasized in Section 1.3, labor markets play a key role in determining the properties of an economy's short-run aggregate supply 12
VAR methods suggest that the monetary transmission mechanism may be weak and unreliable in low-in... more VAR methods suggest that the monetary transmission mechanism may be weak and unreliable in low-income countries (LICs). But are structural VARs identified via short-run restrictions capable of detecting a transmission mechanism when one exists, under research conditions typical of these countries? Using small DSGEs as data-generating processes, we assess the impact on VAR-based inference of short data samples, measurement error, high-frequency supply shocks, and other features of the LIC environment. The impact of these features on finite-sample bias appears to be relatively modest when identification is valid-a strong caveat, especially in LICs. However, many of these features undermine the precision of estimated impulse responses to monetary policy shocks, and cumulatively they suggest that "insignificant" results can be expected even when the underlying transmission mechanism is strong.
Social Science Research Network, 1990
In many developing countries the financial system is characterized by the absence of organized ma... more In many developing countries the financial system is characterized by the absence of organized markets for securities and equities, by capital controls, and by legal ceilings on bank borrowing and lending rates, a situation which gives rise to parallel markets for foreign exchange and informal loan markets. This paper analyzes how changes in monetary policy instruments (bank credit, administered interest rates, required reserve ratios, and intervention in the parallel exchange market) are transmitted to domestic aggregate demand in a financially-repressed economy. Such an analysis is necessary to understand how the move to a more market-oriented system would affect the economy in the short run.
International Monetary Fund eBooks, 1998
Social Science Research Network, Jan 3, 1989
In pursuing a steady-state reserve target, policymakers in small open economies can resort to dev... more In pursuing a steady-state reserve target, policymakers in small open economies can resort to devaluation or to temporary increases in public saving. This paper contrasts the dynamic implications of these alternative policies in a model with optimizing agents who possess perfect foresight. In general, the private sector cannot be insulated from the effects of the government`s reserve-accumulation policies. The dynamic effects of devaluation depend on the fiscal policy rule in effect. In contrast to devaluation, the "equivalent" fiscal policies imply discontinuities in private consumption and temporary tax increases may cause key macroeconomic variables to overshoot their steady-state values.
Cambridge University Press eBooks, Apr 29, 2011
As shown in Chapter 1, most emerging-market and developing economies maintain some type of offici... more As shown in Chapter 1, most emerging-market and developing economies maintain some type of officially determined exchange rate regime. Accordingly, the benchmark model of Part 2 was built on the assumption of a fixed exchange rate. However, as also shown in Chapter 1, a substantial number of emerging-market economies – and a few developing economies as well – operate exchange rate regimes that are best described as managed or free floats. To examine how the economy behaves in the short run under this alternative exchange rate regime, in this chapter we will revisit the benchmark model of Part 2 and investigate how it would need to be modified to describe an economy with floating exchange rates. This extension will not only allow us to study the macroeconomics of some important emerging economies but will also give us a frame of reference for analyzing optimal exchange rate regimes in Chapter 18. The structure of this chapter is as follows: the first section spells out the analytical framework that we will use to study a floating exchange rate economy. Section II takes the first step in analyzing such an economy by examining how the equilibrium nominal exchange rate is determined when the central bank does not intervene in the foreign exchange market. Section III assembles the complete short-run model under floating rates, building on the groundwork laid out in the two preceding sections.
Cambridge University Press eBooks, Apr 29, 2011
Edward Elgar Publishing eBooks, Sep 30, 2008