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Anti-Inflationary Monetary Policy and the Capital Import Tax

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  • Liviatan, Nissan

Abstract

Anti-inflationary monetary policy faces special problems under flexible exchange rate and free capital movements. While this policy might be quite effective in reducing inflation it is also likely to create changes in relative prices which can be undesirable. In particular the short run capital imports which are introduced by the restrictive policy may bias the deflationary effect towards the exchange rate and thus lead to its appreciation in real terms. While this phenomenon may be temporary it may cause cufficient concern in an export oriented economy.

Suggested Citation

  • Liviatan, Nissan, 1980. "Anti-Inflationary Monetary Policy and the Capital Import Tax," The Warwick Economics Research Paper Series (TWERPS) 171, University of Warwick, Department of Economics.
    • Handle: RePEc:wrk:warwec:171
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    File URL: https://warwick.ac.uk/fac/soc/economics/research/workingpapers/1978-1988/twerp171.pdf
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    Cited by:

    1. Obstfeld, Maurice & Stockman, Alan C., 1985. "Exchange-rate dynamics," Handbook of International Economics, in: R. W. Jones & P. B. Kenen (ed.), Handbook of International Economics, edition 1, volume 2, chapter 18, pages 917-977, Elsevier.
    2. Richard C. Marston, 1987. "Exchange Rate Policy Reconsidered," NBER Working Papers 2310, National Bureau of Economic Research, Inc.
    3. Buiter, Willem H. & Miller, Marcus, 1980. "Monetary Policy And International Competitiveness," Economic Research Papers 269135, University of Warwick - Department of Economics.
    4. Willem H. Buiter & Marcus Miller, 1991. "Real Exchange Rate Overshooting and the Output Cost of Bringing Down Inflation," NBER Chapters, in: International Volatility and Economic Growth: The First Ten Years of The International Seminar on Macroeconomics, pages 239-277, National Bureau of Economic Research, Inc.
    5. Alonso, Miguel A. & Rallo, Juan Ramón & Romero, Alberto, 2013. "El efecto de los impuestos a las transacciones financieras en la estabilidad de los mercados de capital. Un debate sin resolver," El Trimestre Económico, Fondo de Cultura Económica, vol. 0(317), pages 207-231, enero-mar.
    6. Richard C. Marston & Guido Carli & Jacques Attali & John R. Petty & Robert Solomon, 1988. "Exchange Rate Coordination," NBER Chapters, in: International Economic Cooperation, pages 79-166, National Bureau of Economic Research, Inc.
    7. Rudiger Dornbusch & Jeffrey Frankel, 1988. "The Flexible Exchange Rate System: Experience and Alternatives," International Economic Association Series, in: Silvio Borner (ed.), International Finance and Trade in a Polycentric World, chapter 7, pages 151-208, Palgrave Macmillan.
    8. David W.R. Gruen, 1991. "The Effect of Steady Inflation on Interest Rates and the Real Exchange Rate in a World with Free Capital Flows," RBA Research Discussion Papers rdp9101, Reserve Bank of Australia.

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