01765cas a2200253 a 4500 AALejournalIMF001133 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451843835 1018-5941 BD-DhAAL BD-DhAAL Auernheimer, Leonardo. Bad Dreams Under Alternative Anchors : Are the Consequences Different? / Leonardo Auernheimer, Susan George. Washington, D.C. : International Monetary Fund, 2000. 1 online resource (23 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 Using a simple model, this paper shows how a strict monetary rule exhibits characteristics similar to those of an exchange rate anchor, in terms of a lack of robustness in the presence of adverse expectations ('bad dreams'). More specifically, as an anticipated devaluation under an exchange rate rule leads to well-known contractionary effects, an anticipated increase in the money stock under a monetary rule, though initially expansionary, becomes contractionary when these expectations are not validated. This suggests that much of the criticism of an exchange rate anchor implicitly considers not another rule but rather, discretion as the alternative. Mode of access: Internet George, Susan. IMF Working Papers; Working Paper ; No. 2000/020 Full text available on IMF http://elibrary.imf.org/view/journals/001/2000/020/001.2000.issue-020-en.xml IMF e-Library