This PDF is a selection from a published volume from... Research Volume Title: International Dimensions of Monetary Policy
... goods. Therefore, there is a continuum of intermediate goods firms of measure unity. Because we want to allow for some real rigidity in price setting, we introduce local labor markets for each intermediate-goods firm (see, for instance, Woodford [2003]). A fraction of the workers work in the nontrad ...
... goods. Therefore, there is a continuum of intermediate goods firms of measure unity. Because we want to allow for some real rigidity in price setting, we introduce local labor markets for each intermediate-goods firm (see, for instance, Woodford [2003]). A fraction of the workers work in the nontrad ...
The impact of commodity price shocks in a major producing
... spliced by quarterly inflation rates. The consumer prices indices utilized are named “Headline CPI” and from 1996 to 2009 the base of the index is 2008, while it is 2009 for the remaining of the observations. The interest rate is the average nominal lending rate of the financial system, 30 to 89 day ...
... spliced by quarterly inflation rates. The consumer prices indices utilized are named “Headline CPI” and from 1996 to 2009 the base of the index is 2008, while it is 2009 for the remaining of the observations. The interest rate is the average nominal lending rate of the financial system, 30 to 89 day ...
CURRENCY COMPETITION BETWEEN EURO AND US DOLLAR Li
... areas, will only be in equilibrium if, after adjusting for different risks, investors receive the same rate of return in both markets. So if the market offers a higher return than another in local currency units, this advantage has to be taken away by expected changes of exchange rates: the currency ...
... areas, will only be in equilibrium if, after adjusting for different risks, investors receive the same rate of return in both markets. So if the market offers a higher return than another in local currency units, this advantage has to be taken away by expected changes of exchange rates: the currency ...
Hyperinflation in Zimbabwe Money Demand, Seigniorage and Aid shocks Tara McIndoe
... entering an extended period of hyperinflation, as defined by Cagan (1956).1 The authorities in Zimbabwe view the recent high inflation period through two prisms. First they maintain that the private sector bid up prices speculatively in order to maximise profits and exert extreme pressure on the eco ...
... entering an extended period of hyperinflation, as defined by Cagan (1956).1 The authorities in Zimbabwe view the recent high inflation period through two prisms. First they maintain that the private sector bid up prices speculatively in order to maximise profits and exert extreme pressure on the eco ...
Global Pricing
... Due to differences in the value of different currency, similar products in different countries may be priced differently. This has to do not just with demand for that particular product, but with macroeconomic demand for national currencies, which affects inflation and, by extension, pricing. Co ...
... Due to differences in the value of different currency, similar products in different countries may be priced differently. This has to do not just with demand for that particular product, but with macroeconomic demand for national currencies, which affects inflation and, by extension, pricing. Co ...
NBER WORKING PAPER SERIES SELF-VALIDATING OPTIMUM CURRENCY AREAS Giancarlo Corsetti Paolo Pesenti
... [2001a]), our setup allows for imperfect pass-through of exchange rate onto export prices. In what follows, the degree of pass-through is endogenously chosen ex-ante by exporters, in the form of a rule of limited price flexibility contingent on exchange rate movements. To distinguish our theory from ...
... [2001a]), our setup allows for imperfect pass-through of exchange rate onto export prices. In what follows, the degree of pass-through is endogenously chosen ex-ante by exporters, in the form of a rule of limited price flexibility contingent on exchange rate movements. To distinguish our theory from ...
Removal of exchange control by the Thatcher Government
... during the IMF crisis in 1976, including a ban on the use of sterling for international trade not including the UK.12 Although exchange control was relaxed in 1977 and in 1978 – as a condition of the IMF loan – Dennis Healey, then Chancellor of the Exchequer resisted further relaxation. On the eve o ...
... during the IMF crisis in 1976, including a ban on the use of sterling for international trade not including the UK.12 Although exchange control was relaxed in 1977 and in 1978 – as a condition of the IMF loan – Dennis Healey, then Chancellor of the Exchequer resisted further relaxation. On the eve o ...
The Market for Foreign
... • Capital flight has its largest impact on the country from which the capital is fleeing, but it also affects other countries. • If investors become concerned about the safety of their investments, capital can quickly leave an economy. © 2007 Thomson South-Western ...
... • Capital flight has its largest impact on the country from which the capital is fleeing, but it also affects other countries. • If investors become concerned about the safety of their investments, capital can quickly leave an economy. © 2007 Thomson South-Western ...
Interest Rate Surprises and Transmission Mechanism in Turkey: Evidence from
... whereas the previous studies typically employ monthly macroeconomic series such as the industrial production index, the consumer price index and real or nominal exchange rates. We believe that these conventional variables exclude a significant portion of the economic activity and market forces. To f ...
... whereas the previous studies typically employ monthly macroeconomic series such as the industrial production index, the consumer price index and real or nominal exchange rates. We believe that these conventional variables exclude a significant portion of the economic activity and market forces. To f ...
The Market Microstructure Approach to Foreign Exchange: Looking
... al. 2012). Retail traders do condition their trades on exchange rate forecasts, but those forecasts appear uninformative because as a group they lose money (Heimer and Simon 2011). Dealers are entirely absent from the standard macroeconomic models. They earn bonuses based on trading profits earned ...
... al. 2012). Retail traders do condition their trades on exchange rate forecasts, but those forecasts appear uninformative because as a group they lose money (Heimer and Simon 2011). Dealers are entirely absent from the standard macroeconomic models. They earn bonuses based on trading profits earned ...
International Aspects of U.S. Monetary and Fiscal Policy Paul Krugman* Introduction
... The inflationary impact of the oil shock of 1979 forced the governments of industrial countries to make a hard choice. There were (and are) only three logically consistent ways to approach a situation of uncomfortably high inflation. The first is to learn to live with it, by indexing most long-term ...
... The inflationary impact of the oil shock of 1979 forced the governments of industrial countries to make a hard choice. There were (and are) only three logically consistent ways to approach a situation of uncomfortably high inflation. The first is to learn to live with it, by indexing most long-term ...
A theory of the currency denomination of international trade
... Received 7 November 2002; received in revised form 1 October 2003; accepted 2 January 2004 ...
... Received 7 November 2002; received in revised form 1 October 2003; accepted 2 January 2004 ...
Stability in International Economy: The LINK Experience The
... even more built-in stability and reduced multiplier responses. Similarly, if m is large and positively associated with Y, as is often the case in small countries, we find even stronger leakages and smaller multiplier responses. If 2.0 is a rough figure for a large, relatively closed economy~ the cor ...
... even more built-in stability and reduced multiplier responses. Similarly, if m is large and positively associated with Y, as is often the case in small countries, we find even stronger leakages and smaller multiplier responses. If 2.0 is a rough figure for a large, relatively closed economy~ the cor ...
This PDF is a selection from an out-of-print volume from... of Economic Research
... by the United States, and provided with loans of $3.75 billion from America and $1.25 billion from Canada, Britain had attempted, on 15 July 1947, to return to external convertibility. Massive private conversions of sterling balances into gold and dollars forced the British authorities to abandon th ...
... by the United States, and provided with loans of $3.75 billion from America and $1.25 billion from Canada, Britain had attempted, on 15 July 1947, to return to external convertibility. Massive private conversions of sterling balances into gold and dollars forced the British authorities to abandon th ...
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.