Monetary Policy under Alternative Asset Market Structures: the Case
... In a complete markets setting, Benigno and Benigno (2003) explore the consequences of such internal and external distortions for optimal monetary policy in a stochastic twocountry framework. De Paoli (2008) and Faia and Monacelli (2008) present a similar analysis in a small open economy setting.3 Th ...
... In a complete markets setting, Benigno and Benigno (2003) explore the consequences of such internal and external distortions for optimal monetary policy in a stochastic twocountry framework. De Paoli (2008) and Faia and Monacelli (2008) present a similar analysis in a small open economy setting.3 Th ...
Going Global: Transition from Plan to Market in the World Economy
... qualify. The Indian economy has long been marked by public ownership of much industry and a Kafkaesque network of regulatory controls on private decisions relating to investment, production, and trade. Also, the Indian rupee was not convertible on current or capital account. The economy had, in effe ...
... qualify. The Indian economy has long been marked by public ownership of much industry and a Kafkaesque network of regulatory controls on private decisions relating to investment, production, and trade. Also, the Indian rupee was not convertible on current or capital account. The economy had, in effe ...
Real Output and Prices Adjustments under Different
... Considering a substantial similarity of exchange rate regimes employed by the most of the European transition economies in the early 1990s (provided their diversity at later stages of the transition process) similar initial conditions at the starting point of the transition process seem to be a cruc ...
... Considering a substantial similarity of exchange rate regimes employed by the most of the European transition economies in the early 1990s (provided their diversity at later stages of the transition process) similar initial conditions at the starting point of the transition process seem to be a cruc ...
NBER WORKING PAPER SERIES FLEXIBLE EXCHANGE RATES AS SHOCK ABSORBERS Sebastian Edwards
... instance, if due to indexation or other mechanisms real wages are inflexible.4 This key point has also been recognized by modern scholars that have analyzed the merits of alternative exchange rate regimes (Dornbusch, 2001; Kenen, 2002). Recently, a number of authors have argued that flexible exchang ...
... instance, if due to indexation or other mechanisms real wages are inflexible.4 This key point has also been recognized by modern scholars that have analyzed the merits of alternative exchange rate regimes (Dornbusch, 2001; Kenen, 2002). Recently, a number of authors have argued that flexible exchang ...
Volume and Liquidity After Cross
... whether arising from trading costs, from informational barriers or from regulatory obstacles –– that shelter less active trading venues from the gravitational pull of the larger one. Whether such frictions exist, so that an active foreign market can be sustained after a cross-listing, is an empirica ...
... whether arising from trading costs, from informational barriers or from regulatory obstacles –– that shelter less active trading venues from the gravitational pull of the larger one. Whether such frictions exist, so that an active foreign market can be sustained after a cross-listing, is an empirica ...
Time-Varying Risk, Interest Rates, and Exchange Rates
... are not only large but also highly variable. Unlike other models, ours generates such premia. This success suggests that the friction in the model, asset market segmentation, may belong in a complete model of interest rates and exchange rates. Our model is related to a huge literature on generating ...
... are not only large but also highly variable. Unlike other models, ours generates such premia. This success suggests that the friction in the model, asset market segmentation, may belong in a complete model of interest rates and exchange rates. Our model is related to a huge literature on generating ...
A Primer on the Euro Breakup
... > The mechanics of a currency breakup are surprisingly straightforward; the real problem for Europe is overvalued real effective exchange rates and extremely high debt – Historically, moving from one currency to another has not led to severe economic or legal problems. In almost all cases, the trans ...
... > The mechanics of a currency breakup are surprisingly straightforward; the real problem for Europe is overvalued real effective exchange rates and extremely high debt – Historically, moving from one currency to another has not led to severe economic or legal problems. In almost all cases, the trans ...
What Explains Movements in the Peso/Dollar
... difference of the 90-day Brazilian and Chilean government bill yields. This serves as a proxy for alternative investment opportunities for international investors in the region (or among emerging markets), or carry trade opportunities using peso as the funding currency. In both cases, a higher Brazi ...
... difference of the 90-day Brazilian and Chilean government bill yields. This serves as a proxy for alternative investment opportunities for international investors in the region (or among emerging markets), or carry trade opportunities using peso as the funding currency. In both cases, a higher Brazi ...
foreign exchange risk
... 52. Under the current rate method, if a firm's foreign-currency-denominated assets exceed its foreign-currency-denominated liabilities, a devaluation must result in a loss and a revaluation must result in a gain. Exhibit 10.2 applies the four methods to a hypothetical balance sheet that is affected ...
... 52. Under the current rate method, if a firm's foreign-currency-denominated assets exceed its foreign-currency-denominated liabilities, a devaluation must result in a loss and a revaluation must result in a gain. Exhibit 10.2 applies the four methods to a hypothetical balance sheet that is affected ...
Weak Dollar, Strong Dollar: Causes and Consequences
... Many would argue that the great virtue of floating over fixed exchange rates is that in that regime the monetary authority, free from the need to use monetary policy to maintain the fixed rate, can make domestic stabilization its primary focus. ...
... Many would argue that the great virtue of floating over fixed exchange rates is that in that regime the monetary authority, free from the need to use monetary policy to maintain the fixed rate, can make domestic stabilization its primary focus. ...
WARWICK ECONOMIC RESEARCH PAPERS Trade Costs and the Open Macroeconomy No 778
... Intuitively, by raising the price of imported goods trade costs render domestic goods more attractive to consumers. As a consequence, spending is predominantly kept within the domestic country and consumption is tilted towards domestic goods, creating an endogenous home bias in consumption. This con ...
... Intuitively, by raising the price of imported goods trade costs render domestic goods more attractive to consumers. As a consequence, spending is predominantly kept within the domestic country and consumption is tilted towards domestic goods, creating an endogenous home bias in consumption. This con ...
Identification of US Monetary Policy Shocks
... regarding the behavior of exchange rates, UIP, both conditional and unconditional, fails during the Volcker era but tends to hold during the post-Volcker era. The conditional excess returns on foreign currency following US monetary shocks are positive in the Volcker era and close to zero in the pos ...
... regarding the behavior of exchange rates, UIP, both conditional and unconditional, fails during the Volcker era but tends to hold during the post-Volcker era. The conditional excess returns on foreign currency following US monetary shocks are positive in the Volcker era and close to zero in the pos ...
the importance of an efficient allocation of
... cost measures so that they better capture non-price elements of competitiveness. A promising example of this approach, albeit still incapable of capturing all the relevant factors, is the one that appears in Bennett et al. (2009). These authors argue that non-price elements of competitiveness should ...
... cost measures so that they better capture non-price elements of competitiveness. A promising example of this approach, albeit still incapable of capturing all the relevant factors, is the one that appears in Bennett et al. (2009). These authors argue that non-price elements of competitiveness should ...
DIFFERENCES IN EXCHANGE RATE PASS
... for these divergences is important for any meaningful analysis of differences in passthrough rates across and within countries as divergences arising from the product composition of imports exposed to exchange rate fluctuations can account for a significant amount of the aggregate differences of imp ...
... for these divergences is important for any meaningful analysis of differences in passthrough rates across and within countries as divergences arising from the product composition of imports exposed to exchange rate fluctuations can account for a significant amount of the aggregate differences of imp ...
Sticky Prices and Sectoral Real Exchange Rates
... rate, defined as the relative price of two country’s consumption baskets. It has been welldocumented that across a wide variety of countries that real exchange rates are volatile, persistent, and closely track the nominal exchange rate. (See, for example, Mussa 1986.) Accounting for these properties ...
... rate, defined as the relative price of two country’s consumption baskets. It has been welldocumented that across a wide variety of countries that real exchange rates are volatile, persistent, and closely track the nominal exchange rate. (See, for example, Mussa 1986.) Accounting for these properties ...
Chapter 20. Output, the Interest Rate, and the Exchange Rate
... of 5% in yens, and—as the exchange rate is expected to be the same next year as it is today—an expected return of 5% in dollars. So what will happen? Again, at the initial exchange rate of 100, investors want to shift out of Japanese bonds into U.S. bonds. As they do so, they sell yens for dollars, ...
... of 5% in yens, and—as the exchange rate is expected to be the same next year as it is today—an expected return of 5% in dollars. So what will happen? Again, at the initial exchange rate of 100, investors want to shift out of Japanese bonds into U.S. bonds. As they do so, they sell yens for dollars, ...
Prestigious Stock Exchanges - Federal Reserve Bank of New York
... studies have shown that the Eurobond market has become the world’s largest bond market in recent years (Peristiani 2007; Peristiani and Santos 2008). As for equity markets, the more competitive European and emerging-market stock exchanges have in fact become better able to retain their home base, wh ...
... studies have shown that the Eurobond market has become the world’s largest bond market in recent years (Peristiani 2007; Peristiani and Santos 2008). As for equity markets, the more competitive European and emerging-market stock exchanges have in fact become better able to retain their home base, wh ...
Output and Exchange Rate in the Short Run
... • The first effect increases aggregate demand for domestic products, the second effect decreases aggregate demand for domestic products (by making them more expensive). Copyright © 2006 Pearson Addison-Wesley. All rights reserved. ...
... • The first effect increases aggregate demand for domestic products, the second effect decreases aggregate demand for domestic products (by making them more expensive). Copyright © 2006 Pearson Addison-Wesley. All rights reserved. ...
Exchange rate exposure among European firms
... Germany, over a period ranging from 1 January 1987 to 31 December 1998. This allows us to examine exchange rate risk in three open, closely integrated, medium sized economies where large firms can be expected to exhibit relatively high levels of multinational activity and, hence, exposure. Our sampl ...
... Germany, over a period ranging from 1 January 1987 to 31 December 1998. This allows us to examine exchange rate risk in three open, closely integrated, medium sized economies where large firms can be expected to exhibit relatively high levels of multinational activity and, hence, exposure. Our sampl ...
Limit Orders and the Intraday Behavior of Market Liquidity
... patient traders place limit orders and therefore supply liquidity to the market. The urgent traders, on the other hand, place market orders and consume liquidity. Informed traders are more likely to be urgent than patient because they want to exploit their super information3. Glosten shows that pati ...
... patient traders place limit orders and therefore supply liquidity to the market. The urgent traders, on the other hand, place market orders and consume liquidity. Informed traders are more likely to be urgent than patient because they want to exploit their super information3. Glosten shows that pati ...
Australia`s Medium-run Exchange Rate: A Macroeconomic Balance
... component in turn. Net foreign income accounts for a large part of Australia’s current account deficit (on average, 80 per cent in 1997–2001). Net foreign income consists mainly of net investment income, and therefore we ignore net compensation from foreign employment in our model. Net investment in ...
... component in turn. Net foreign income accounts for a large part of Australia’s current account deficit (on average, 80 per cent in 1997–2001). Net foreign income consists mainly of net investment income, and therefore we ignore net compensation from foreign employment in our model. Net investment in ...
the structure of forward and futures markets
... The following process is the only type of permissible futures transaction that occurs off the floor of the ...
... The following process is the only type of permissible futures transaction that occurs off the floor of the ...
View/Open
... stronger economy, a smaller current account deficit, a higher domestic interest rate, change in investors’ expectations, etc. were major reasons for a stronger New Zealand dollar during 2002 and 2003. Drew and Sethi (2007) indicated that a tight monetary policy or a higher official cash rate would r ...
... stronger economy, a smaller current account deficit, a higher domestic interest rate, change in investors’ expectations, etc. were major reasons for a stronger New Zealand dollar during 2002 and 2003. Drew and Sethi (2007) indicated that a tight monetary policy or a higher official cash rate would r ...
Exchange rate overshooting and the costs of floating April 2004 1 Michele Cavallo
... This paper is also related to a recent analytical literature on balance sheet effects and output contractions.5 This literature has stressed the role of “balance sheet effects” in explaining the contractionary effects of depreciations: when liabilities are in foreign currency while assets are in lo ...
... This paper is also related to a recent analytical literature on balance sheet effects and output contractions.5 This literature has stressed the role of “balance sheet effects” in explaining the contractionary effects of depreciations: when liabilities are in foreign currency while assets are in lo ...