Short-termism and the dangers of prior announcement of policy when there is hysteresis in trade and competitiveness

Research output: Contribution to journalArticle

Abstract

rt has been suggested recently that, in the presence of non-zero entry costs and where there is sluggish adjustment, 'over-shooting' of the real exchange rate and 'short-termist' behaviour by firms may exacerbate hysteresis effects in trade and the real exchange rate. The purpose of this paper is to show that, in special circumstances, hysteresis effects may in fact be reduced in these circumstances. In other words, short-run volatility of the real exchange rate and short-sighted behaviour may actually dampen trade and exchange rate hysteresis. Furthermore, by pre-announcing policy, governments may actually worsen hysteresis effects in trade and the real exchange rare.

Original languageEnglish
Pages (from-to)40-52
Number of pages13
JournalScottish Journal of Political Economy
Volume46
Publication statusPublished - 1999

Keywords

  • MONETARY

Cite this

@article{75c13cbf245440c4b985621acb746e6f,
title = "Short-termism and the dangers of prior announcement of policy when there is hysteresis in trade and competitiveness",
abstract = "rt has been suggested recently that, in the presence of non-zero entry costs and where there is sluggish adjustment, 'over-shooting' of the real exchange rate and 'short-termist' behaviour by firms may exacerbate hysteresis effects in trade and the real exchange rate. The purpose of this paper is to show that, in special circumstances, hysteresis effects may in fact be reduced in these circumstances. In other words, short-run volatility of the real exchange rate and short-sighted behaviour may actually dampen trade and exchange rate hysteresis. Furthermore, by pre-announcing policy, governments may actually worsen hysteresis effects in trade and the real exchange rare.",
keywords = "MONETARY",
author = "McCausland, {W D}",
year = "1999",
language = "English",
volume = "46",
pages = "40--52",
journal = "Scottish Journal of Political Economy",
issn = "0036-9292",
publisher = "Wiley-Blackwell",

}

TY - JOUR

T1 - Short-termism and the dangers of prior announcement of policy when there is hysteresis in trade and competitiveness

AU - McCausland, W D

PY - 1999

Y1 - 1999

N2 - rt has been suggested recently that, in the presence of non-zero entry costs and where there is sluggish adjustment, 'over-shooting' of the real exchange rate and 'short-termist' behaviour by firms may exacerbate hysteresis effects in trade and the real exchange rate. The purpose of this paper is to show that, in special circumstances, hysteresis effects may in fact be reduced in these circumstances. In other words, short-run volatility of the real exchange rate and short-sighted behaviour may actually dampen trade and exchange rate hysteresis. Furthermore, by pre-announcing policy, governments may actually worsen hysteresis effects in trade and the real exchange rare.

AB - rt has been suggested recently that, in the presence of non-zero entry costs and where there is sluggish adjustment, 'over-shooting' of the real exchange rate and 'short-termist' behaviour by firms may exacerbate hysteresis effects in trade and the real exchange rate. The purpose of this paper is to show that, in special circumstances, hysteresis effects may in fact be reduced in these circumstances. In other words, short-run volatility of the real exchange rate and short-sighted behaviour may actually dampen trade and exchange rate hysteresis. Furthermore, by pre-announcing policy, governments may actually worsen hysteresis effects in trade and the real exchange rare.

KW - MONETARY

M3 - Article

VL - 46

SP - 40

EP - 52

JO - Scottish Journal of Political Economy

JF - Scottish Journal of Political Economy

SN - 0036-9292

ER -