This PDF is a selection from an out-of-print volume from... of Economic Research Volume Title: International Aspects of Fiscal Policies
... country i's currency by the same amount. A higher nominal interest rate reduces the stock of real-money balances demanded in the long run, if the interest-sensitivity of the demand for real-money balances is nonzero. Given the rate of money growth (and thus the rate of inflation), expansionary fisca ...
... country i's currency by the same amount. A higher nominal interest rate reduces the stock of real-money balances demanded in the long run, if the interest-sensitivity of the demand for real-money balances is nonzero. Given the rate of money growth (and thus the rate of inflation), expansionary fisca ...
Putting the Cart Before the Horse? Capital Account Liberalization and
... sequenced in a manner that reinforces domestic financial liberalization and allows for ...
... sequenced in a manner that reinforces domestic financial liberalization and allows for ...
Prasad-uce05-s 405386 en
... sequenced in a manner that reinforces domestic financial liberalization and allows for ...
... sequenced in a manner that reinforces domestic financial liberalization and allows for ...
Free Full text
... The double index ij refers to a country i observed at time t. εit is a disturbance term distributed as N (0, Ωi ), where Ωi is the variance-covariance matrix of the elements of the residuals; γ i and βi are m × 1 vectors where m is the number of regressors. This equation is the long-run cointegratio ...
... The double index ij refers to a country i observed at time t. εit is a disturbance term distributed as N (0, Ωi ), where Ωi is the variance-covariance matrix of the elements of the residuals; γ i and βi are m × 1 vectors where m is the number of regressors. This equation is the long-run cointegratio ...
PDF
... the details of goods markets and the purchasing power parity in exchange rate determination. A general feature of the theoretical model is that agricultural prices and the exchange rate will overshoot. A monetary expansion reduces interest rates and leads to the anticipation of a depreciated currenc ...
... the details of goods markets and the purchasing power parity in exchange rate determination. A general feature of the theoretical model is that agricultural prices and the exchange rate will overshoot. A monetary expansion reduces interest rates and leads to the anticipation of a depreciated currenc ...
MONETARY POLICY IN A DSGE MODEL WITH “CHINESE CHARACTERISTICS”
... However, the estimated fiscal costs of sterilization in the literature are typically calculated ex post in the absence of default. Ex ante, under efficient capital markets and open capital accounts, uncovered interest rate parity (UIP) should ensure that expected returns on domestic and foreign asse ...
... However, the estimated fiscal costs of sterilization in the literature are typically calculated ex post in the absence of default. Ex ante, under efficient capital markets and open capital accounts, uncovered interest rate parity (UIP) should ensure that expected returns on domestic and foreign asse ...
Management of Transaction Exposure
... Perhaps the most direct and popular way of hedging transaction exposure is by currency forward contracts or forward market hedge. Generally speaking, the firm may sell (buy) its foreign currency receivables (payables) forward to eliminate its exchange risk exposure. In the above example, in order to ...
... Perhaps the most direct and popular way of hedging transaction exposure is by currency forward contracts or forward market hedge. Generally speaking, the firm may sell (buy) its foreign currency receivables (payables) forward to eliminate its exchange risk exposure. In the above example, in order to ...
No Slide Title
... • EC 7th Directive, passed in 1983 and implemented in most member states by the early 90s, imposes consolidation but does not prescribe any particular translation method. The only requirement is that the notes to the accounts should disclose the method that was used ...
... • EC 7th Directive, passed in 1983 and implemented in most member states by the early 90s, imposes consolidation but does not prescribe any particular translation method. The only requirement is that the notes to the accounts should disclose the method that was used ...
Foreign Exchange Intervention Since the Plaza Accord
... Many economists and officials were, and remain, skeptical that intervention can have significant sustained effects on exchange rates and current account balances. The evidence from the 1980s does not refute that skepticism. However, the experience of the past 15 years shows that intervention can hav ...
... Many economists and officials were, and remain, skeptical that intervention can have significant sustained effects on exchange rates and current account balances. The evidence from the 1980s does not refute that skepticism. However, the experience of the past 15 years shows that intervention can hav ...
This PDF is a selection from an out-of-print volume from... of Economic Research
... out the promise of major improvements in economic performance. However, estimates of the quantitative impacts of policy decisions in one economy on other economies are quite small. These results. together with explicit calculations ofthe benefits of coordination, suggest the gains will rarely be sig ...
... out the promise of major improvements in economic performance. However, estimates of the quantitative impacts of policy decisions in one economy on other economies are quite small. These results. together with explicit calculations ofthe benefits of coordination, suggest the gains will rarely be sig ...
Modelling and Forecasting the Indian Re/US Dollar Exchange Rate
... to derive the relevant macroeconomic fundamentals affecting exchange rates. Exchange Rate Models: Theoretical Considerations Purchasing power parity, monetary and portfolio balance models The earliest and simplest model of exchange rate determination, known as the purchasing power parity (PPP) theor ...
... to derive the relevant macroeconomic fundamentals affecting exchange rates. Exchange Rate Models: Theoretical Considerations Purchasing power parity, monetary and portfolio balance models The earliest and simplest model of exchange rate determination, known as the purchasing power parity (PPP) theor ...
DP2006/04 Other stabilisation objectives within an inflation targeting regime: Some stochastic
... operate monetary policy consistent with medium term price stability. To take an extreme example, a PTA could direct the Bank to maintain a fixed level of the exchange rate against a country that is maintaining price stability. Since real equilibrium exchange rates remain fairly constant over long pe ...
... operate monetary policy consistent with medium term price stability. To take an extreme example, a PTA could direct the Bank to maintain a fixed level of the exchange rate against a country that is maintaining price stability. Since real equilibrium exchange rates remain fairly constant over long pe ...
Conventions in the Foreign Exchange Market
... domestic and foreign currencies. In line with the confirmation bias (Kahneman, Slovic and Tversky (1991)), optimistic agents will put more weight on fundamentals that confirm their bull sentiment. Bull agents will therefore overweight good news thereby underweighting (and perhaps ignoring) bad news. ...
... domestic and foreign currencies. In line with the confirmation bias (Kahneman, Slovic and Tversky (1991)), optimistic agents will put more weight on fundamentals that confirm their bull sentiment. Bull agents will therefore overweight good news thereby underweighting (and perhaps ignoring) bad news. ...
The Role of Currency Board Regime during Economic Crisis
... regime is associated with stricter fiscal policy because of the credibility role of economic policy. Since many exchange rate devaluations are associated with fiscal deficit and severe problems of credibility for government and Central Banks, tighter fiscal policy becomes a required element in any e ...
... regime is associated with stricter fiscal policy because of the credibility role of economic policy. Since many exchange rate devaluations are associated with fiscal deficit and severe problems of credibility for government and Central Banks, tighter fiscal policy becomes a required element in any e ...
Chapter 15: Options on stock indices and currencies
... months. The current portfolio value is $25M. The manager decides on a 90% hedge by purchasing 6-month puts on the S&P500 index. The portfolio’s beta with the S&P500 index is 2.4. The S&P500 index stands at a level of 1,250 points and its dollar multiplier is $100. The annual riskfree rate is 10%, wh ...
... months. The current portfolio value is $25M. The manager decides on a 90% hedge by purchasing 6-month puts on the S&P500 index. The portfolio’s beta with the S&P500 index is 2.4. The S&P500 index stands at a level of 1,250 points and its dollar multiplier is $100. The annual riskfree rate is 10%, wh ...
The effects of asymmetric information between borrowers and Iris Claus
... since at least Wicksell’s early writings on monetary dynamics (Wicksell, 1906) and Fisher’s “debtdeflation theory of great depressions” (Fisher, 1933). More recently, distressed financial and banking systems, e.g. in the United States, the United Kingdom, Scandinavia, Latin America, Japan and other ...
... since at least Wicksell’s early writings on monetary dynamics (Wicksell, 1906) and Fisher’s “debtdeflation theory of great depressions” (Fisher, 1933). More recently, distressed financial and banking systems, e.g. in the United States, the United Kingdom, Scandinavia, Latin America, Japan and other ...
This PDF is a selection from an out-of-print volume from... Bureau of Economic Research
... to a gain from diversification. If the levels of output at home and abroad were perfectly correlated, there would be no basis for distinguishing between the income-streams of the two parts of the world. The assumption that there is some minor fixed cost to holding wealth abroad represents an attempt ...
... to a gain from diversification. If the levels of output at home and abroad were perfectly correlated, there would be no basis for distinguishing between the income-streams of the two parts of the world. The assumption that there is some minor fixed cost to holding wealth abroad represents an attempt ...
REAL RATE AND OUTPUT COST OF BRINGING DOWN INFLATION
... nationally traded goods whose foreign currency prices can be treated as exogenous will decline by the same proportion as the increase in the value of the domestic currency. ...
... nationally traded goods whose foreign currency prices can be treated as exogenous will decline by the same proportion as the increase in the value of the domestic currency. ...
Purchasing power parity
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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.