Seminar Paper No. 740 AN ESTIMATED DSGE MODEL FOR SWEDEN
... quite important to analyze to what extent, in practice, policy was constrained in the target zone and under in‡ation targeting. To analyze these questions, we estimate a stochastic business cycle model with physical capital, deviations from the law of one price (LOP) and Calvo price and wage setting ...
... quite important to analyze to what extent, in practice, policy was constrained in the target zone and under in‡ation targeting. To analyze these questions, we estimate a stochastic business cycle model with physical capital, deviations from the law of one price (LOP) and Calvo price and wage setting ...
NBER WORKING PAPER SERIES A CURRENCY OF ONE’S OWN?
... under some circumstances, will lead to lower economic growth (Fischer 1976; Parrado and Velasco 2002). Frankel (1999) has taken a more nuanced view, and has argued that there is no unique recipe on exchange rate policy; while some countries will benefit from hard pegs, for other countries a floating ...
... under some circumstances, will lead to lower economic growth (Fischer 1976; Parrado and Velasco 2002). Frankel (1999) has taken a more nuanced view, and has argued that there is no unique recipe on exchange rate policy; while some countries will benefit from hard pegs, for other countries a floating ...
Export Dynamics in Large Devaluations January 2014
... exports depend on the stock of exporters actively selling overseas as well as the terms of trade. Over time, the stock of exporters can change as a result of costly investments by non-exporters to access foreign markets and by existing exporters to maintain their presence in foreign markets. Speci… ...
... exports depend on the stock of exporters actively selling overseas as well as the terms of trade. Over time, the stock of exporters can change as a result of costly investments by non-exporters to access foreign markets and by existing exporters to maintain their presence in foreign markets. Speci… ...
Exchange Rates - Carleton University
... The nominal exchange rate is simply the price of one currency in terms of another 1 . Any trade between two countries involves the exchange of currency; this enables one country to purchase goods from another country. Due to the necessity of exchanging currency, a foreign exchange market exists. It ...
... The nominal exchange rate is simply the price of one currency in terms of another 1 . Any trade between two countries involves the exchange of currency; this enables one country to purchase goods from another country. Due to the necessity of exchanging currency, a foreign exchange market exists. It ...
Trade Network Centrality and Currency Risk Premia
... in trade network centrality. These patterns hold for both nominal and real risk premia and interest rate differentials1 A U.S. investor who went long in a portfolio of peripheral countries’ currencies and short in a portfolio of central countries’ currencies from 1984 through 2013 received an annuali ...
... in trade network centrality. These patterns hold for both nominal and real risk premia and interest rate differentials1 A U.S. investor who went long in a portfolio of peripheral countries’ currencies and short in a portfolio of central countries’ currencies from 1984 through 2013 received an annuali ...
THE VALUATION OF FOREIGN CURRENCY OPTIONS IN KENYA UNDER STOCHASTIC VOLATILITY BY:
... option if the underlying currency is trading in the market at a higher price than the strike price of the option. The call option gives the right to buy, so in exercising it the holder buys currency at the strike price and can then sell it in the market at a higher price. Similarly, the holder of a ...
... option if the underlying currency is trading in the market at a higher price than the strike price of the option. The call option gives the right to buy, so in exercising it the holder buys currency at the strike price and can then sell it in the market at a higher price. Similarly, the holder of a ...
Exchange Rates and Jobs: What Do We Learn
... resources to and from specific sectors of the economy. One would, in general, expect large fluctuations in relative prices to have major implications on the relative quantities supplied and demanded. The levels of production, prices and markups, profit margins, and input demands and—for exporters—th ...
... resources to and from specific sectors of the economy. One would, in general, expect large fluctuations in relative prices to have major implications on the relative quantities supplied and demanded. The levels of production, prices and markups, profit margins, and input demands and—for exporters—th ...
This PDF is a selection from an out-of-print volume from... of Economic Research Volume Title: International Aspects of Fiscal Policies
... The future economic prospects of many developing nations, especially those with huge dollar-denominated debts, are also crucially affected by U.S. fiscal policy. Although appreciation of the dollar from 1980 to 1985 may have improved the competitiveness of some developing countries whose currencies ...
... The future economic prospects of many developing nations, especially those with huge dollar-denominated debts, are also crucially affected by U.S. fiscal policy. Although appreciation of the dollar from 1980 to 1985 may have improved the competitiveness of some developing countries whose currencies ...
Chapter 20
... The euro must appreciate by about 7.477% over the year in order to make the loan in euros as costly as a U.S. dollar loan. 9. IRP Application to Short-term Financing. Assume that interest rate parity exists. If a firm believes that the forward rate is an unbiased predictor of the future spot rate, w ...
... The euro must appreciate by about 7.477% over the year in order to make the loan in euros as costly as a U.S. dollar loan. 9. IRP Application to Short-term Financing. Assume that interest rate parity exists. If a firm believes that the forward rate is an unbiased predictor of the future spot rate, w ...
3rd draft. - Harvard Kennedy School
... monetary policy (as reflected in low real interest rates or expected inflation), a speculative bubble (resulting from bandwagon expectations) and risk (possibly resulting from geopolitical uncertainties). Motivated in part by this episode, this paper presents a theory that allows a role for macroeco ...
... monetary policy (as reflected in low real interest rates or expected inflation), a speculative bubble (resulting from bandwagon expectations) and risk (possibly resulting from geopolitical uncertainties). Motivated in part by this episode, this paper presents a theory that allows a role for macroeco ...
Chapter 15 Exchange-Rate Systems and currency crises
... caused by • A redefinition of a par value • Changes in an exchange rate • Changes in the supply of or demand for foreign exchange © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a ...
... caused by • A redefinition of a par value • Changes in an exchange rate • Changes in the supply of or demand for foreign exchange © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a ...
How Big (Small?) are Fiscal Multipliers?
... In particular, this is the rst study to use quarterly-frequency data from, and provide estimates for, developing countries. As we point out below, recent improvements in data quality in a number of developing countries have made working with quarterly data possible. Inclusion of developing countri ...
... In particular, this is the rst study to use quarterly-frequency data from, and provide estimates for, developing countries. As we point out below, recent improvements in data quality in a number of developing countries have made working with quarterly data possible. Inclusion of developing countri ...
External Adjustment in Oil Exporters
... For the past decade, oil exporters enjoyed large current account surpluses, raising questions at the time about whether these are too big from a normative point of view and from the perspective of global imbalances (Beidas Strom and Cashin, 2011; Arezki and Hasanov, 2013). However, after almost four ...
... For the past decade, oil exporters enjoyed large current account surpluses, raising questions at the time about whether these are too big from a normative point of view and from the perspective of global imbalances (Beidas Strom and Cashin, 2011; Arezki and Hasanov, 2013). However, after almost four ...
This PDF is a selection from a published volume from... Economic Research Volume Title: NBER Macroeconomics Annual 2008, Volume 23
... dynamics, such as real activity and inflation) and by series‐specific components unrelated to the general state of the economies, et . For instance, (2) specifies that indicators of country‐level economic activity or inflation are driven by a European interest rate, EA latent factors Ft , and a comp ...
... dynamics, such as real activity and inflation) and by series‐specific components unrelated to the general state of the economies, et . For instance, (2) specifies that indicators of country‐level economic activity or inflation are driven by a European interest rate, EA latent factors Ft , and a comp ...
Transmission mechanisms and inflation targeting
... determined entirely by the target rate of inflation even though the path by which inflation achieves this target rate implies a particular level of cumulated output loss or gain. From low levels in the 1960s, Colombian inflation increased and became stuck at a higher levels by 1973. For the near fut ...
... determined entirely by the target rate of inflation even though the path by which inflation achieves this target rate implies a particular level of cumulated output loss or gain. From low levels in the 1960s, Colombian inflation increased and became stuck at a higher levels by 1973. For the near fut ...
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.