TY  - JOUR
AU  - Huang,Haizhou
AU  - Wei,Shang-Jin
TI  - Monetary Policies for Developing Countries: The Role of Corruption
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 10093
PY  - 2003
Y2  - November 2003
UR  - http://www.nber.org/papers/w10093
L1  - http://www.nber.org/papers/w10093.pdf
N1  - Author contact info:
Haizhou Huang
Research Department
China International Capital Corp. (CICC)
E-Mail: haizhou.huang@gmail.com

Shang-Jin Wei
Graduate School of Business
Columbia University
Uris Hall 619
3022 Broadway
New York, NY 10027-6902
Tel: 212/854-9139
E-Mail: shangjin.wei@columbia.edu
AB  - This paper examines the role of corruption in the design of monetary policies for developing countries and obtains several interesting results. First, pegged exchange rates, currency boards, or dollarization, while often prescribed as a solution to the problem of a lack-of-credibility for developing countries, is typically not optimal in countries with serious corruption. Second, the optimal degree of conservatism for a Rogoff (1985)-type central banker is an inverse function of the corruption level. Third, either an optimally-designed inflation target or an optimal conservative central banker is preferableto an exchange rate peg, currency board, or dollarization.
ER  -