01778cas a2200241 a 4500 AALejournalIMF000525 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451841879 1018-5941 BD-DhAAL BD-DhAAL Morales, R. Exchange Rate Uncertainty in Money-Based Stabilization Programs / R. Morales. Washington, D.C. : International Monetary Fund, 1998. 1 online resource (18 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students Complementing the explanation provided by Calvo and Vegh (1994) for money-based stabilization programs, exchange rate uncertainty introduced to a particular version of the portfolio approach with imperfect competition in the banking system leads to a bias toward appreciation that is directly related to the divergence of expectations and that dampens the interaction between portfolio movements and the real exchange rate. Based on Frankel-Froot, uncertainty exists when the fundamental equilibrium real exchange rate is temporarily unknown in a foreign exchange market with two types of agents: 'parity-guessers,' who expect a jump to a reference parity level, and 'money-followers,' who expect nominal depreciation equal to the monetary rule. Mode of access: Internet IMF Working Papers; Working Paper ; No. 1998/003 Full text available on IMF http://elibrary.imf.org/view/journals/001/1998/003/001.1998.issue-003-en.xml IMF e-Library