Revisiting the exchange rate dynamics at the US zero lower bound

This study revisits the dynamics of dollar/euro exchange rate in response to the US monetary policy shock at the zero lower bound (ZLB) including the COVID-19 pandemic. The key findings are as follows. First, the exchange rate behavior indicates Dornbusch (1976)'s overshooting hypothesis at the states classified as beginning and ending of the ZLB. Second, the revived ZLB induced by the COVID-19 pandemic has a larger impact on the exchange rate than that induced by the global financial crisis. Third, the responses of the exchange rates demonstrate the uncovered interest rate parity and the overshooting. © 2022,Seoul Journal of Economics. All Rights Reserved.

Lessons from the Great Recession for a Post-Pandemic Economy: The Limits of Monetary Policy

In this paper we present a response mechanism to the COVID-19 pandemic consistent with the previous empirical literature that emerged during the Great Recession, although not with the underlying ontology. Therefore, we analyze the principle of the endogeneity of money and argue how the proposed mechanism, the Guaranteed Employment, is an institutional and functional solution that allows for overcoming the limitations of the mechanisms used during the Great Recession. This is a further step towards closer coordination between the Central Bank and the Treasury, which has certainly proven essential for financial stability since the international financial crisis of 2007-2008, and which must also encompass macroeconomic stability to cope with the current and future challenges we face as a society: today it is the pandemic, but tomorrow it will be climate change.

Repensar la restricción externa en tiempos de pandemia: la política de empleador de última instancia para Latinoamérica

El objetivo de este artículo es dar a conocer la estrategia de desarrollo de la peri­feria, proponiendo un cambio de perspectiva: en lugar de buscar conseguir divisas para crecer y, con ello, generar empleo, se defiende un estabilizador automático, basado en una reserva de empleados, lo que llamamos política de empleador de última instancia, como eje para una estrategia de desarrollo, estable y autónoma. Si bien la periferia puede ver limitada su capacidad de importar, argumentamos que los gobiernos eligen entre el pleno empleo y el desempleo. Los efectos económicos de la pandemia de COVID-19 obligan a examinar esta elección. Alternate : The aim of this paper is to rethink the development strategy of the periphery pro­posing a change of perspective: instead of seeking to obtain foreign trade to grow and, thus, generate employment, an automatic stabiliser based on a reserve of employees is endorsed, what we call the employer of last resort policy, as the axis for a stable and autonomous development strategy. While the periphery may have limited import capacity, governments choose between full employment and unem­ployment. Until now, the idea has prevailed that maintaining a part of the popula­tion unemployed is, for some strange reason, preferable.