Re: Keynesian Christmas!

[Diego Miranda <miranda@xxxxxxxxxxxxxxx>]

I am sorry, I wrote the previous note in a rush. What I meant to say was
that once one dollar equals one euro in the international money markets
(and not before),  then the argentine peso will require the central bank
to have enough  convertible currency (other than pesos) so as to exchange
all circulating  pesos at a rate of half a euro+half a dollar per peso.

There is no theoretical reason for this rule, other than the letter
of the law determining the nominal exchange rate of Argentina.

Diego

On Thu, 27 Dec 2001, Sean Reilly wrote:

> "..euro and the dollar reach parity (which could happen, I guess, rather shortly, as the euro starts circulating)."
>
> This is a technicality, but I am not quite sure what you meant by that statement.  I
think you were refering to Purchasing Price Parity, but I am not aware of any
theoretical Time Differential when comparing a newly incepted currecy to one that
already exists.  I was not aware that there was a time delay in reaching parity.  I would think that from the first time the "new" currency starts circulating at a given value relative to the currency that it is being compared to, the parity would exist.   Maybe you can clarify this for me.  If I am incorrect in this thought process, please feel free to reference any literature that has dealt with this subject.
>
> Thanks,
> Sean