TY - BOOK ID - 84540841 TI - Bad Dreams Under Alternative Anchors : Are the Consequences Different? AU - Auernheimer, Leonardo. AU - George, Susan. PY - 2000 SN - 1462302653 1452754330 1281604615 9786613785305 1451891644 PB - Washington, D.C. : International Monetary Fund, DB - UniCat KW - Banks and Banking KW - Foreign Exchange KW - Money and Monetary Policy KW - Monetary Policy, Central Banking, and the Supply of Money and Credit: General KW - Interest Rates: Determination, Term Structure, and Effects KW - Currency KW - Foreign exchange KW - Monetary economics KW - Finance KW - Real exchange rates KW - Exchange rates KW - Monetary base KW - Exchange rate adjustments KW - Real interest rates KW - Money supply KW - Interest rates UR - https://www.unicat.be/uniCat?func=search&query=sysid:84540841 AB - 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. ER -