Fixed Exchange Rates and the Trilemma
... • Open economies have different features than closed economies – True general eguilibrium model – Deal with agents that are not homogenous (at least two different countries) – Interaction between financial markets, goods markets and factor markets – Research is driven by empirical anomalies • PPP, U ...
... • Open economies have different features than closed economies – True general eguilibrium model – Deal with agents that are not homogenous (at least two different countries) – Interaction between financial markets, goods markets and factor markets – Research is driven by empirical anomalies • PPP, U ...
IOSR Journal of Economics and Finance (IOSR-JEF)
... 7%, and then enters into a swap to convert the dollar loan into INR. The counterparty of the swap may likely be an Indian company (Party B) that requires $2 million in U.S. funds. Likewise, the Indian company will be able to attain a cheaper borrowing rate domestically than abroad – let's say that t ...
... 7%, and then enters into a swap to convert the dollar loan into INR. The counterparty of the swap may likely be an Indian company (Party B) that requires $2 million in U.S. funds. Likewise, the Indian company will be able to attain a cheaper borrowing rate domestically than abroad – let's say that t ...
Interpretation of Macroeconomic Results From A CGE Model Such
... Table 3 lists the variables in the linearised form of the stylised macro model. The number of variables (30) exceeds the number of equations (17) by thirteen. Thus, thirteen variables must be set exogenously. Table 3 shows the exogenous/endogenous status of each variable that has a natural classific ...
... Table 3 lists the variables in the linearised form of the stylised macro model. The number of variables (30) exceeds the number of equations (17) by thirteen. Thus, thirteen variables must be set exogenously. Table 3 shows the exogenous/endogenous status of each variable that has a natural classific ...
NBER WORKING PAPER SERIES INFLATION ILLUSION, CREDIT, AND ASSET PRICING Monika Piazzesi
... each country. These data are available from the BIS. To measure real rents, we use the rent component of each country’s consumer price index available from Datastream and divide by the consumer price index.6 National account data have several advantages. First, the resulting price-rent ratios have m ...
... each country. These data are available from the BIS. To measure real rents, we use the rent component of each country’s consumer price index available from Datastream and divide by the consumer price index.6 National account data have several advantages. First, the resulting price-rent ratios have m ...
foreign currency option
... • A foreign currency futures contract is an exchangetraded agreement calling for future delivery of a standard amount of foreign currency at a fixed time, place and price • Foreign currency futures contracts are in reality standardized forward contracts. Unlike forward contracts, however, trading oc ...
... • A foreign currency futures contract is an exchangetraded agreement calling for future delivery of a standard amount of foreign currency at a fixed time, place and price • Foreign currency futures contracts are in reality standardized forward contracts. Unlike forward contracts, however, trading oc ...
Internal and External Current Account Balances in the
... costs well below the euro area average, boosting the competitiveness of German exporters. Revealingly, two-thirds of the 1.2 per cent annual average growth in German GDP over the period 1999-2005 came from net exports, with only one-third from growth in domestic demand (Ahearne and Pisani-Ferry, 200 ...
... costs well below the euro area average, boosting the competitiveness of German exporters. Revealingly, two-thirds of the 1.2 per cent annual average growth in German GDP over the period 1999-2005 came from net exports, with only one-third from growth in domestic demand (Ahearne and Pisani-Ferry, 200 ...
NBER WORKING PAPER SERIES
... numéraire determined? Who or what chooses the numéraire or how does it emerge spontaneously from the trading and exchange interactions of purposefully acting but not necessarily unboundedly rational private agents? (2) What determines whether the numéraire be a pure abstract unit of account (like ph ...
... numéraire determined? Who or what chooses the numéraire or how does it emerge spontaneously from the trading and exchange interactions of purposefully acting but not necessarily unboundedly rational private agents? (2) What determines whether the numéraire be a pure abstract unit of account (like ph ...
referees, and Stephen J. Turnovsky July 1983
... the remainder of which is exported. Domestic residents consume two goods, the domestic good and an imported good, the foreign price of which they ...
... the remainder of which is exported. Domestic residents consume two goods, the domestic good and an imported good, the foreign price of which they ...
Weak Dollar, Strong Dollar: Causes and Consequences
... CRS-2 and lamented by foreign exporters and domestic consumers. Further, a sustained dollar depreciation could be expected to slow and then reverse the steady rise of the U.S. trade deficit. Also, a depreciating dollar tends to improve the U.S. net debt position by raising the value U.S. foreign as ...
... CRS-2 and lamented by foreign exporters and domestic consumers. Further, a sustained dollar depreciation could be expected to slow and then reverse the steady rise of the U.S. trade deficit. Also, a depreciating dollar tends to improve the U.S. net debt position by raising the value U.S. foreign as ...
NBER WORKING PAPER SERIES MONETARY AND EXCHANGE RATE POLICY COORDINATION IN ASEAN+1
... adjustment, as shown in the tables in the next section. They were overheating, with inflation causing real appreciation of their currencies, although they were stable in nominal terms against the USD. They had large and growing current account deficits, and growing external debt denominated in forei ...
... adjustment, as shown in the tables in the next section. They were overheating, with inflation causing real appreciation of their currencies, although they were stable in nominal terms against the USD. They had large and growing current account deficits, and growing external debt denominated in forei ...
The Use of Derivative Financial Instruments to
... $500,000). However, what if interest rates were to rise in the subsequent quarters? This would pose a threat to the firm’s budget. The preceding example is indicative of the risk of using floating-rate or variable rate borrowing. Interest-rate risk affects fixed-rate debt, too. For example, if a fi ...
... $500,000). However, what if interest rates were to rise in the subsequent quarters? This would pose a threat to the firm’s budget. The preceding example is indicative of the risk of using floating-rate or variable rate borrowing. Interest-rate risk affects fixed-rate debt, too. For example, if a fi ...
The Impact of RMB Appreciation on Shandong Foreign Trade Enterprises
... economic growth rate, the RMB will certainly face pressure of appreciation. 2.2 From the difference of the level of interest rate at home and abroad In opening economy, The changes of interest rate are closely related with the changes of exchange rates, and its role is at the core of capital flows, ...
... economic growth rate, the RMB will certainly face pressure of appreciation. 2.2 From the difference of the level of interest rate at home and abroad In opening economy, The changes of interest rate are closely related with the changes of exchange rates, and its role is at the core of capital flows, ...
This PDF is a selection from an out-of-print volume from... of Economic Research
... reflected only gradually and with a lag in domestic nominal labour costs and/or goods prices. Nominal appreciation of the currency therefore amounts to real appreciation - a loss of competitiveness. Since in most of the simple analytical models used to analyse the overshooting propositions there is ...
... reflected only gradually and with a lag in domestic nominal labour costs and/or goods prices. Nominal appreciation of the currency therefore amounts to real appreciation - a loss of competitiveness. Since in most of the simple analytical models used to analyse the overshooting propositions there is ...
A small open economy`s view on interest rate differential`s
... The determinants of nominal exchange rates has been investigated in various theoretical models. Hacker, Karlsson and Månsson (2012 and 2014) have investigated the nominal interest rate differentials relationship to the nominal exchange rates using wavelet analysis, where one can decompose the time s ...
... The determinants of nominal exchange rates has been investigated in various theoretical models. Hacker, Karlsson and Månsson (2012 and 2014) have investigated the nominal interest rate differentials relationship to the nominal exchange rates using wavelet analysis, where one can decompose the time s ...
Internal and External Current Account Balances in the Euro Area
... 2006, and Munchau 2006). According to this view, wage restraint, facilitated by a decline in unionization in Germany’s labour market, has kept growth in unit labour costs well below the euro area average, boosting the competitiveness of German exporters. Revealingly, two-thirds of the 1.2 per cent ...
... 2006, and Munchau 2006). According to this view, wage restraint, facilitated by a decline in unionization in Germany’s labour market, has kept growth in unit labour costs well below the euro area average, boosting the competitiveness of German exporters. Revealingly, two-thirds of the 1.2 per cent ...
Purchasing power parity
Purchasing power parity (PPP) is a component of some economic theories and is a technique used to determine the relative value of different currencies.Theories that invoke purchasing power parity assume that in some circumstances (for example, as a long-run tendency) it would cost exactly the same number of, say, US dollars to buy euros and then to use the proceeds to buy a market basket of goods as it would cost to use those dollars directly in purchasing the market basket of goods.The concept of purchasing power parity allows one to estimate what the exchange rate between two currencies would have to be in order for the exchange to be at par with the purchasing power of the two countries' currencies. Using that PPP rate for hypothetical currency conversions, a given amount of one currency thus has the same purchasing power whether used directly to purchase a market basket of goods or used to convert at the PPP rate to the other currency and then purchase the market basket using that currency. Observed deviations of the exchange rate from purchasing power parity are measured by deviations of the real exchange rate from its PPP value of 1.PPP exchange rates help to minimize misleading international comparisons that can arise with the use of market exchange rates. For example, suppose that two countries produce the same physical amounts of goods as each other in each of two different years. Since market exchange rates fluctuate substantially, when the GDP of one country measured in its own currency is converted to the other country's currency using market exchange rates, one country might be inferred to have higher real GDP than the other country in one year but lower in the other; both of these inferences would fail to reflect the reality of their relative levels of production. But if one country's GDP is converted into the other country's currency using PPP exchange rates instead of observed market exchange rates, the false inference will not occur.