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International price dispersion in state-dependent
International price dispersion in state-dependent

... Rogers (1996) provide a metric that has often been used to gauge the impact that national borders have on international relative price movements: the border between the United States and Canada increases the volatility of relative prices for two cities it separates by as much as 75,000 miles would i ...
The Effectiveness of Open Market Operations in Monetary
The Effectiveness of Open Market Operations in Monetary

... Lesotho, Namibia, and Swaziland. There were no internal restrictions on movements of funds within the area and  virtually  all  external  transactions  were  effected  through  banks  in  South  Africa  and  subject  to  South  African  exchange  controls.  This  situation  continued  after  Botswan ...
Essays on Monetary and Exchange Rate Effects in India
Essays on Monetary and Exchange Rate Effects in India

... Annex 4.2 Diagnostic tests on aggregate and bilateral trade using REER ................. 201 Annex 4.3 Analysis using asymmetric lag lengths ..................................................... 202 Annex 4.4 Diagnostics: Sectoral trade using REER ................................................... ...
Wicksell`s Classical Dichotomy: Is The Natural Rate Of Interest
Wicksell`s Classical Dichotomy: Is The Natural Rate Of Interest

Ch. 21 - Weber State University
Ch. 21 - Weber State University

... (a) An exchange-rate target has the disadvantage of leaving the country more open to a speculative attack on its currency. (b) An exchange-rate target has the disadvantage of weakening the accountability of policymakers, particularly in emerging market countries, because the public finds it harder t ...
The implementation of monetary policy in Australia
The implementation of monetary policy in Australia

... For more detail on the history of the Bank's domestic market operation, see Rankin (1992 and 1995) and Battellino ...
Impact of the Euro adoption on the Economy of Latvia
Impact of the Euro adoption on the Economy of Latvia

... by 0.4%. Hence over a longer period of time, the adoption of the euro will have a positive effect on Latvia's exports and result in a 0.3% rise in total exports. Moreover, according to the estimates of export functions, positive effects from the elimination of nominal exchange rate volatility agains ...
217 KB
217 KB

NBER WORKING PAPER SERIES Russell Cooper Hubert Kempf
NBER WORKING PAPER SERIES Russell Cooper Hubert Kempf

... and inflation. We contend that the issues of stabilization policy and design of a monetary union are closely interrelated: the stability of member economies within a monetary union On North American Monetary Union, see Buiter [1999], Grubel 119991 and the references therein. 2These issues are paramo ...
EXCHANGE RATE AND INFLATION TARGETING IN MOROCCO
EXCHANGE RATE AND INFLATION TARGETING IN MOROCCO

... (SAPs) and let their currency depreciate by about 40% over the next few years, before gradually adopting fixed peg against a composite currency (i.e., nominal exchange rate targeting) for Morocco and a crawling peg (i.e., real exchange rate targeting) for Tunisia. Also, they have so far judiciously ...
NBER WORKING PAPER SERIES ASSESSING THE EMERGING GLOBAL FINANCIAL ARCHITECTURE:
NBER WORKING PAPER SERIES ASSESSING THE EMERGING GLOBAL FINANCIAL ARCHITECTURE:

... last fifteen years – though one could expect that the present crisis would induce these countries to move toward higher exchange rate flexibility. Currently, non-EMGs exhibit a greater degree of exchange rate stability and monetary independence, but a lower degree of financial integration compared t ...
Venice Summer Institute 2004
Venice Summer Institute 2004

... were perfect substitutes. Put another way, the various first-order conditions that must hold in equilibrium under the optimising behaviour of households and firms pin down the natural rate. It is instructive to consider the effects of shocks on the natural rate. For example, an expected increase in ...
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CHF Strength and Swiss Export Performance – Evidence and

... higher the total volume of Swiss exports would have been if all bilateral exchange rates had remained at their October 2005 level. For example, on that date, the CHF/euro exchange rate was 1.544. We predict our earlier models using this scenario and we also take into account that our sample in the p ...
Stability of Demand for Money in India: Evidence from Monetary and
Stability of Demand for Money in India: Evidence from Monetary and

... policy. Essentially, it’s a prerequisite for use of monetary aggregate as an intermediate target. Money demand stability implies that the quantity of money can be predictable related to various macroeconomics variables (Judd and Scadding (1982) and Friedman (1987)). In fact various macroeconomic var ...
Challenges for Monetary Policy: New and Old
Challenges for Monetary Policy: New and Old

... Finally, the most casual, but at the same time the most striking, piece of evidence relates to recent experience. Akerlof et al argued that, at inflation rates below 3%, the existence of a permanent trade-off meant that unemployment would rise. In fact, since their paper was presented to a Brookings ...
NBER WORKING PAPER SERIES WORLD FOOD PRICES AND MONETARY POLICY Luis Catão
NBER WORKING PAPER SERIES WORLD FOOD PRICES AND MONETARY POLICY Luis Catão

... when world food prices underwent a steep decline, following the global financial crisis in September 2008, did national inflation rates recede and the attendant deviations from central inflation targets narrow sharply. Insofar as world food price shocks are exogenous to small open economies, these ...
World Food Prices and Monetary Policy
World Food Prices and Monetary Policy

... when world food prices underwent a steep decline, following the global financial crisis in September 2008, did national inflation rates recede and the attendant deviations from central inflation targets narrow sharply. Insofar as world food price shocks are exogenous to small open economies, these ...
Historical Validity of Money.wps
Historical Validity of Money.wps

... This condition obtains because what is being stored is simply the nominal quantity of the medium of exchange by (for) which the purchasing power of the specific commodity, be it labor service or whatever, was measured (exchanged). While the exchange ratio (purchasing power) of each and every commodi ...
3) The unemployment rate minus cyclical unemployment
3) The unemployment rate minus cyclical unemployment

interest rate
interest rate

... CHAPTER 11: Money Demand, the Equilibrium Interest Rate, and Monetary Policy ...
CH 14 PDF - Cameron University
CH 14 PDF - Cameron University

... • Also owns gold, makes loans to banks, and holds other assets including foreign exchange and federal agency securities • Largest liability is currency outstanding – Some is held in bank vaults and is called vault cash – The rest is held by the public ...
Chapter 14
Chapter 14

... • Also owns gold, makes loans to banks, and holds other assets including foreign exchange and federal agency securities • Largest liability is currency outstanding – Some is held in bank vaults and is called vault cash – The rest is held by the public ...
Slide 1
Slide 1

... crisis, were reluctant to abandon unsustainable exchange rates in a timely manner and only did so only after they were hit by a balance-of-payments crisis.  At some level, the statement is right because if the exchange rate was allowed to float freely, some of the international reserve loss would h ...
Would protectionism defuse global imbalances and spur economic
Would protectionism defuse global imbalances and spur economic

... countries), AS (Emerging Asia: China, India, Hong Kong, Malaysia, Philippines, Singapore, South Korea, Taiwan province of China and Thailand) and RC (the Remaining Countries not considered elsewhere). The steady-state shares of world GDP of the four blocs are, respectively, 27.9, 32.2, 15.5 and 24.4 ...
Cost-Push Shocks and Monetary Policy in Open Economies Alan Sutherland
Cost-Push Shocks and Monetary Policy in Open Economies Alan Sutherland

... pF,i (j) = p∗F,i (j) S for all i and j where an asterisk indicates a price measured in foreign currency and S is the exchange rate (defined as the domestic price of foreign currency). Note that purchasing power parity does not hold because home and foreign agents have different preferences over consu ...
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Fixed exchange-rate system

A fixed exchange rate, sometimes called a pegged exchange rate, is a type of exchange rate regime where a currency's value is fixed against either the value of another single currency, to a basket of other currencies, or to another measure of value, such as gold. There are benefits and risks to using a fixed exchange rate. A fixed exchange rate is usually used in order to stabilize the value of a currency by directly fixing its value in a predetermined ratio to a different, more stable or more internationally prevalent currency (or currencies), to which the value is pegged. In doing so, the exchange rate between the currency and its peg does not change based on market conditions, the way floating currencies will do. This makes trade and investments between the two currency areas easier and more predictable, and is especially useful for small economies in which external trade forms a large part of their GDP.A fixed exchange-rate system can also be used as a means to control the behavior of a currency, such as by limiting rates of inflation. However, in doing so, the pegged currency is then controlled by its reference value. As such, when the reference value rises or falls, it then follows that the value(s) of any currencies pegged to it will also rise and fall in relation to other currencies and commodities with which the pegged currency can be traded. In other words, a pegged currency is dependent on its reference value to dictate how its current worth is defined at any given time. In addition, according to the Mundell–Fleming model, with perfect capital mobility, a fixed exchange rate prevents a government from using domestic monetary policy in order to achieve macroeconomic stability.In a fixed exchange-rate system, a country’s central bank typically uses an open market mechanism and is committed at all times to buy and/or sell its currency at a fixed price in order to maintain its pegged ratio and, hence, the stable value of its currency in relation to the reference to which it is pegged. The central bank provides the assets and/or the foreign currency or currencies which are needed in order to finance any payments imbalances.In the 21st century, the currencies associated with large economies typically do not fix or peg exchange rates to other currencies. The last large economy to use a fixed exchange rate system was the People's Republic of China which, in July 2005, adopted a slightly more flexible exchange rate system called a managed exchange rate. The European Exchange Rate Mechanism is also used on a temporary basis to establish a final conversion rate against the Euro (€) from the local currencies of countries joining the Eurozone.
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