International Business Cycles: Theory vs. Evidence
... price of imports to exports, we extend the theoretical model to allow the outputs of the two countries to be imperfect substitutes. This extension, of course, allows the relative price of the two goods to differ from 1. In the data, fluctuations in the terms of trade in the industrialized .world hav ...
... price of imports to exports, we extend the theoretical model to allow the outputs of the two countries to be imperfect substitutes. This extension, of course, allows the relative price of the two goods to differ from 1. In the data, fluctuations in the terms of trade in the industrialized .world hav ...
Monetary Policy and Exchange Rate Volatility in a Small Open
... stochastic process—we model monetary policy as endogenous, with a short-term interest rate being the instrument of that policy.4 For this very reason our framework allows us to model alternative monetary regimes. Furthermore, we believe that our approach accords much better with the practice of mode ...
... stochastic process—we model monetary policy as endogenous, with a short-term interest rate being the instrument of that policy.4 For this very reason our framework allows us to model alternative monetary regimes. Furthermore, we believe that our approach accords much better with the practice of mode ...
Exchange Rate Regime: Does it Matter for Inflation?
... Since the breakdown of the Bretton Woods and the resulting uncertainty regarding what represents an appropriately valued currency and how it can be achieved, the economic performance of many developing countries has been greatly challenged. The importance and degree of what is at stake is evidenced ...
... Since the breakdown of the Bretton Woods and the resulting uncertainty regarding what represents an appropriately valued currency and how it can be achieved, the economic performance of many developing countries has been greatly challenged. The importance and degree of what is at stake is evidenced ...
schnabl mmi08 6642029 en
... of the Chinese yuan (Goldstein 2003, Cheung, Chinn and Fujii 2005, Cline 2005, Frankel 2006, McKinnon and Schnabl 2006, Goodfriend and Prasad 2007). Proponents of a flexible yuan have stressed the need for macroeconomic flexibility in the economic catch-up process of the Chinese economy (Goldstein 2 ...
... of the Chinese yuan (Goldstein 2003, Cheung, Chinn and Fujii 2005, Cline 2005, Frankel 2006, McKinnon and Schnabl 2006, Goodfriend and Prasad 2007). Proponents of a flexible yuan have stressed the need for macroeconomic flexibility in the economic catch-up process of the Chinese economy (Goldstein 2 ...
NBER WORKING PAPER SERIES PRICE
... Consider a small, open economy and assume that financial variables influence the real variables in this economy with a lag; income, price levels, and the current account balance are assumed to be exogenous;5 the stock of wealth is given and capital gains or losses do not affect ...
... Consider a small, open economy and assume that financial variables influence the real variables in this economy with a lag; income, price levels, and the current account balance are assumed to be exogenous;5 the stock of wealth is given and capital gains or losses do not affect ...
mmi05 razin 225761 en
... flexibility, currency mismatch, FDI, etc. The exchange rate flexibility variable is found as not statistically significant. 6 ...
... flexibility, currency mismatch, FDI, etc. The exchange rate flexibility variable is found as not statistically significant. 6 ...
Financial Globalization and Exchange Rates Philip R. Lane Gian Maria Milesi-Ferretti
... Financial globalization has been one of the most important trends in the world economy in recent decades. This process has involved sharply rising foreign asset and liability positions, whether scaled by GDP or by domestic financial variables (Lane and Milesi-Ferretti 2003, Obstfeld and Taylor 2004) ...
... Financial globalization has been one of the most important trends in the world economy in recent decades. This process has involved sharply rising foreign asset and liability positions, whether scaled by GDP or by domestic financial variables (Lane and Milesi-Ferretti 2003, Obstfeld and Taylor 2004) ...
Consumption Baskets and Currency Choice in International Borrowing
... The theoretical literature offers a number of explanations for the prevalence of foreign currencies in emerging economies’ borrowing. A classic explanation is the lack of monetary credibility (e.g., Bohn 1990, Calvo 1996, Ize and Levy Yeyati 1998, Ize and Parado 2002, Chamon and Hausmann 2005, Jeann ...
... The theoretical literature offers a number of explanations for the prevalence of foreign currencies in emerging economies’ borrowing. A classic explanation is the lack of monetary credibility (e.g., Bohn 1990, Calvo 1996, Ize and Levy Yeyati 1998, Ize and Parado 2002, Chamon and Hausmann 2005, Jeann ...
NBER WORKING PAPER SERIES SUPPLY CAPACITY, VERTICAL SPECIALIZATION AND TARIFF RATES:
... variables are contained in Appendix 1. Estimation is implemented on data spanning a period of 1975q1-2005q1 (I drop the preliminary estimate for GDP in 2005q2). This period spans three episodes of dollar appreciation and three episodes of dollar depreciation; the broad measure of dollar is used, as ...
... variables are contained in Appendix 1. Estimation is implemented on data spanning a period of 1975q1-2005q1 (I drop the preliminary estimate for GDP in 2005q2). This period spans three episodes of dollar appreciation and three episodes of dollar depreciation; the broad measure of dollar is used, as ...
US Economic Data and the Australian Dollar
... of 0.028 per cent (2 basis points). However, when volatility is ‘high’, a similar surprise will, on average, lead to an AUD/USD appreciation of 0.071 per cent (5 basis points). On the other hand, for US housing and consumption-related releases there are no clear effects on the AUD/USD, irrespective ...
... of 0.028 per cent (2 basis points). However, when volatility is ‘high’, a similar surprise will, on average, lead to an AUD/USD appreciation of 0.071 per cent (5 basis points). On the other hand, for US housing and consumption-related releases there are no clear effects on the AUD/USD, irrespective ...
This PDF is a selection from an out-of-print volume from... of Economic Research
... per year. The slowdown was also present in the nontraded sector, whose output’s growth was reduced yet remained positive at 3.4% per year. Interestingly, the program was followed initially by a rise in both total factor productivity and labor productivity relative to their levels prior to stabilizat ...
... per year. The slowdown was also present in the nontraded sector, whose output’s growth was reduced yet remained positive at 3.4% per year. Interestingly, the program was followed initially by a rise in both total factor productivity and labor productivity relative to their levels prior to stabilizat ...
Document
... • A permanent fiscal expansion changes the long-run expected exchange rate. – If the economy starts at long-run equilibrium, a permanent change in fiscal policy has no effect on output. – It causes an immediate and permanent exchange rate jump that offsets exactly the fiscal policy’s direct effect o ...
... • A permanent fiscal expansion changes the long-run expected exchange rate. – If the economy starts at long-run equilibrium, a permanent change in fiscal policy has no effect on output. – It causes an immediate and permanent exchange rate jump that offsets exactly the fiscal policy’s direct effect o ...
54
... Export Unit Value (XUV) of Manufactures Index. These are perhaps the closest approximation to an export price series. However, the export price index is based on a country’s f.o.b, exports to all regions, and so does not reflect differences in prices to ultimate purchasers (Junz and Rhomberg, 1965, ...
... Export Unit Value (XUV) of Manufactures Index. These are perhaps the closest approximation to an export price series. However, the export price index is based on a country’s f.o.b, exports to all regions, and so does not reflect differences in prices to ultimate purchasers (Junz and Rhomberg, 1965, ...
How Does a Depreciation in the Exchange Rate Affect Trade
... By examining whether the J-curve is detected in both the short-run and the long-run, one will be able to find the various relations that exists between the exchange rate and the trade balance at different points in time after a depreciation. The countries covered empirically for this thesis are spre ...
... By examining whether the J-curve is detected in both the short-run and the long-run, one will be able to find the various relations that exists between the exchange rate and the trade balance at different points in time after a depreciation. The countries covered empirically for this thesis are spre ...
Zimbabwe’s Black Market for Foreign Exchange Albert Makochekanwa
... economic growth and in order to finally unify the official and the parallel exchange rates, many sub-Saharan African countries have been trying to reduce the parallel premium through devaluation and the adoption of auction exchange rate systems. Similarly, Zimbabwe since independence has been implem ...
... economic growth and in order to finally unify the official and the parallel exchange rates, many sub-Saharan African countries have been trying to reduce the parallel premium through devaluation and the adoption of auction exchange rate systems. Similarly, Zimbabwe since independence has been implem ...
Regulation Setting, Calculating and Maintaining Overall Open
... d) Currency Swap - two foreign exchange deals between two participants, made in the same currency and at one and the same time (during the course of one business day), but with different delivery dates and different exchange trade rates; e) Currency Option - the right to trade foreign currency, gran ...
... d) Currency Swap - two foreign exchange deals between two participants, made in the same currency and at one and the same time (during the course of one business day), but with different delivery dates and different exchange trade rates; e) Currency Option - the right to trade foreign currency, gran ...
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.