FINANCIAL DERIVATIVES FOR BEGINNERS
... When the hedger owns an asset or expects to own an asset in future and wants to sell it. By shorting an appropriate futures’ contract, the hedger can lock in a price now to sell the asset at some time in future. ...
... When the hedger owns an asset or expects to own an asset in future and wants to sell it. By shorting an appropriate futures’ contract, the hedger can lock in a price now to sell the asset at some time in future. ...
ch20_5e
... Monetary Contraction and Fiscal Expansion: The United States in the Early 1980s Supply siders—a group of economists who argued that a cut in tax rates would boost economic activity. High output growth and dollar appreciation during the early 1980s resulted in an increase in the trade deficit. A high ...
... Monetary Contraction and Fiscal Expansion: The United States in the Early 1980s Supply siders—a group of economists who argued that a cut in tax rates would boost economic activity. High output growth and dollar appreciation during the early 1980s resulted in an increase in the trade deficit. A high ...
Transaction Exposure
... • Types of foreign exchange exposure – Transaction Exposure – measures changes in the value of outstanding financial obligations due to exchange rate changes – Operating Exposure – also called economic exposure, measures the change in the present value of the firm resulting from any change in expect ...
... • Types of foreign exchange exposure – Transaction Exposure – measures changes in the value of outstanding financial obligations due to exchange rate changes – Operating Exposure – also called economic exposure, measures the change in the present value of the firm resulting from any change in expect ...
This PDF is a selection from an out-of-print volume from... Bureau of Economic Research
... Because option-pricing theory is at the heart of dynamic hedging, it is helpful at this point to review the basic option-pricing formula for foreign exchange—the Garman/Kohlhagen formula.8 Although banks and other wholesale traders may use more sophisticated pricing methods that account for varying ...
... Because option-pricing theory is at the heart of dynamic hedging, it is helpful at this point to review the basic option-pricing formula for foreign exchange—the Garman/Kohlhagen formula.8 Although banks and other wholesale traders may use more sophisticated pricing methods that account for varying ...
Historia-COLOMBIA TRADE POLICY-version mar06
... This view contrasts with previous work of Latin American historiography and has also been questioned more recently by North-American authors (see Coatsworth and Williamson (2002), Clemens and Williamson (2002) and Haber (2003), among others). These authors show that during the belle époque (1870-193 ...
... This view contrasts with previous work of Latin American historiography and has also been questioned more recently by North-American authors (see Coatsworth and Williamson (2002), Clemens and Williamson (2002) and Haber (2003), among others). These authors show that during the belle époque (1870-193 ...
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... optimal domestic policy does not react to policy shocks and cyclical conditions in the world economy. This may be the case, for instance, when goods are produced with domestic inputs only and are priced in the producers’ currency, or when exporters are fully insured against currency volatility. Othe ...
... optimal domestic policy does not react to policy shocks and cyclical conditions in the world economy. This may be the case, for instance, when goods are produced with domestic inputs only and are priced in the producers’ currency, or when exporters are fully insured against currency volatility. Othe ...
fixed exchange rates
... Goods Market Consumption C depends positively on disposable income Y-T. Investment I depends positively on output Y, and negatively on the real interest rate r. Government spending G is taken as given. The quantity of imports IM depends positively on both output Y and the real exchange rate ...
... Goods Market Consumption C depends positively on disposable income Y-T. Investment I depends positively on output Y, and negatively on the real interest rate r. Government spending G is taken as given. The quantity of imports IM depends positively on both output Y and the real exchange rate ...
Disturbances to the International Economy Lawrence R. Klein
... When modeling and studying a national economy by simulation methods, it is generally assumed that export volume and import prices are exogenous variables. Export volume depends mainly on world trade or world economic activity, or import requirements of partner countries. Either export volume itself ...
... When modeling and studying a national economy by simulation methods, it is generally assumed that export volume and import prices are exogenous variables. Export volume depends mainly on world trade or world economic activity, or import requirements of partner countries. Either export volume itself ...
NBER WORKING PAPER SERIES EXCHANGE RATE FLEXIBILITY AND Jorge Braga de Macedo
... Earlier versions were presented at the Woodrow Wilson School, Princeton University, the New University of Lisbon (Portugal), The University of Tokyo (Japan), the ASSA meetings in Dallas (Texas), and the Seminaire d'Economie Monetaire Internationale in Paris (France). Comments from participants are g ...
... Earlier versions were presented at the Woodrow Wilson School, Princeton University, the New University of Lisbon (Portugal), The University of Tokyo (Japan), the ASSA meetings in Dallas (Texas), and the Seminaire d'Economie Monetaire Internationale in Paris (France). Comments from participants are g ...
empirical investigation of the relationship between exchange rate
... flow oriented exchange model proposed by Dornbusch and Fisher (1980) states that stock prices movements are caused by exchange rate movements. In the language of Granger Causality, we can say that unidirectional causality stock price movements are caused by fluctuation in exchange rate. The model is ...
... flow oriented exchange model proposed by Dornbusch and Fisher (1980) states that stock prices movements are caused by exchange rate movements. In the language of Granger Causality, we can say that unidirectional causality stock price movements are caused by fluctuation in exchange rate. The model is ...
Global Imbalances: The Role of Non-Tradable Total Factor
... imbalances is polarized. Some argue that global imbalances should not be resisted. This is because they largely manifest as an equilibrium phenomenon, generated by the interaction of growth and financial development differentials among countries, that will resolve themselves slowly over time---see, ...
... imbalances is polarized. Some argue that global imbalances should not be resisted. This is because they largely manifest as an equilibrium phenomenon, generated by the interaction of growth and financial development differentials among countries, that will resolve themselves slowly over time---see, ...
Rethinking the Role of NCBs in the EMU
... and for foreign exchange. These equations state that equilibrium holds for these markets when the excess demand generated endogenously in each is equal to the excess supply that is generated there by changes in the values of the exogenous variables. The last line of the matrix is the residual of a r ...
... and for foreign exchange. These equations state that equilibrium holds for these markets when the excess demand generated endogenously in each is equal to the excess supply that is generated there by changes in the values of the exogenous variables. The last line of the matrix is the residual of a r ...
A fresh look at the merits of a currency union
... losing domestic monetary policy is less of a concern, since the central bank’s response in terms of changing interest rates will be appropriate for all member states. It is when a member state faces ‘asymmetric shocks’ – shocks that affect it differently from other member states – that the relative ...
... losing domestic monetary policy is less of a concern, since the central bank’s response in terms of changing interest rates will be appropriate for all member states. It is when a member state faces ‘asymmetric shocks’ – shocks that affect it differently from other member states – that the relative ...
HIGHWAY CONCESSIONS AND WORLD BANK GUARANTEES
... Bank, Cesar was the deputy director of the Brazilian Road Research Institute in Rio de Janeiro. He holds a Ph.D. in civil engineering from the University of Texas, USA, and a M.Sc. in Production Engineering from the Federal University of Rio de Janeiro. Cesar has published more than 130 papers and a ...
... Bank, Cesar was the deputy director of the Brazilian Road Research Institute in Rio de Janeiro. He holds a Ph.D. in civil engineering from the University of Texas, USA, and a M.Sc. in Production Engineering from the Federal University of Rio de Janeiro. Cesar has published more than 130 papers and a ...
the failure of oca analysis
... could leave the depressed region looking for jobs elsewhere. Alternatively, a regional government issuing fiat currency could rescue the economy by creating money and increasing aggregate spending. This shift in spending offsets the initial negative impact of demand’s decline and causes output and e ...
... could leave the depressed region looking for jobs elsewhere. Alternatively, a regional government issuing fiat currency could rescue the economy by creating money and increasing aggregate spending. This shift in spending offsets the initial negative impact of demand’s decline and causes output and e ...
Oil Prices and Emerging Market Exchange Rates
... global economic performance. Oil price levels can affect the world economy in many different ways. An increase in the oil price will raise the cost of production of goods and services in the economy so it will lead to an increase in price levels. While leading inflation, concerns about the likely in ...
... global economic performance. Oil price levels can affect the world economy in many different ways. An increase in the oil price will raise the cost of production of goods and services in the economy so it will lead to an increase in price levels. While leading inflation, concerns about the likely in ...
How to treat the exchange rate assumption for an
... interest rate scenario inflation would rise faster and approach the target faster than in the baseline scenario, but at the same time the output gap would also increase more and deviate more from zero than in the baseline scenario. In the high interest rate scenario the output gap would be closer to ...
... interest rate scenario inflation would rise faster and approach the target faster than in the baseline scenario, but at the same time the output gap would also increase more and deviate more from zero than in the baseline scenario. In the high interest rate scenario the output gap would be closer to ...
PDF
... (Denis, 1982; and Blandford, 1974), but, at the international level, they have been less successful. Factors cited as difficulties encountered by many international stabilization schemes range from the inability of the producing and consuming countries to reach agreements on export quotas and price ...
... (Denis, 1982; and Blandford, 1974), but, at the international level, they have been less successful. Factors cited as difficulties encountered by many international stabilization schemes range from the inability of the producing and consuming countries to reach agreements on export quotas and price ...
Dollar Index
... History of the US dollar Index: The US Dollar Index was created by the US Federal Reserve in 1973 after the ending of the 1944 Bretton Woods agreement (where a system of fixed exchange rates existed with exchange rate (+/-1%) tied to gold). US Federal Reserve Bank began the calculation of the DXY In ...
... History of the US dollar Index: The US Dollar Index was created by the US Federal Reserve in 1973 after the ending of the 1944 Bretton Woods agreement (where a system of fixed exchange rates existed with exchange rate (+/-1%) tied to gold). US Federal Reserve Bank began the calculation of the DXY In ...
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.