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Exchange Control in Italy and Bulgaria in the Interwar Period
Exchange Control in Italy and Bulgaria in the Interwar Period

... connecting Italy and Bulgaria2 was formed by a lengthy period of restrictions on trade and foreign currency exchange between the wars, in which Bulgaria and Italy were active protagonists practicing exchange control. The history of interwar exchange control in Europe provides us with interesting ins ...
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... In order to simplify matters, we first keep nominal wages fixed by allowing for nominal rigidities in the labor market. The results then turn out to be essentially the same as in the partial equilibrium model. When allowing for nominal wage flexibility, we first consider a constant real wage. In tha ...
A Currency Union or an Exchange Rate Union: Evidence from
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... currency area in East Asia. Before the Asian financial crisis in 1997, most East Asian countries adopted a fixed exchange rate regime or a managed floating regime, virtually pegging to the U.S. dollar. This dollar peg makes the exports of the countries, which compete with Japan for exports, fluctuat ...
Chinese Exporters, Exchange Rate Exposure, and the
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... Chinese exporters in determining the degree of exchange rate pass-through. Marazzi et al. (2005) attribute part of the decline in exchange rate pass-through in U.S. imports in more recent years to the rise of Chinese exports. However, going forward in a period of renminbi appreciation against the do ...
The Market Microstructure Approach to Foreign Exchange: Looking
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... criticism is an essential activity and represents the only route through which science can achieve progress. FX microstructure research is primarily empirical, and can be characterized as adopting this falsification approach to knowledge. When fixed exchange rates were abandoned in the early 1970s t ...
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This PDF is a selection from an out-of-print volume from... of Economic Research Volume Title: International Aspects of Fiscal Policies
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... restrained by either deflationary monetary and fiscal policy or by political turmoil, investment demand since the Korean War has tended to be excessive relative to the supply of savings, and inflation has been acute. The rate of return on investment has tended to be high as may be inferred from the ...
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Exchange-Rate Determination: A Survey of
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... currencies to use in purchasing goods and services abroad. Similarly, advocates of the cost-parity view must recognize that high information and relocation costs weaken the equilibrating forces sufficiently to permit substantial purchasing-power disparities. The third version of PPP, which postulate ...
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The Hrvatska Narodna Banka`s Experiences in Preparation for the

... local currency and negative real interest rates typical for the Croatian preindependence time. Approximately the three quarters of the bank deposits are held in foreign currencies, out of which the major part is in euro. This situation leaves less room for making monetary policy decisions. In additi ...
On Crisis Prevention: Lessons from Mexico and East Asia
On Crisis Prevention: Lessons from Mexico and East Asia

... regime, all five of the East Asian nations had a rigid -- de facto, pegged or quasi pegged -- exchange rate system with respect to the US dollar. Whereas this system worked relatively well while the US dollar was relatively weak in international currency markets, things turned to the worse when, sta ...
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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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