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Essays in International Economics
Essays in International Economics

... underlying foreign payments imbalances in the event of a sudden stop and provide foreign exchange liquidity in the face of a bank run. At the same time the government is trying ...
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NBER WORKING PAPER SERIES 1880-1913 vs. 1972-1997
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... financing. Governments may have trouble making interest payments on debt coming due as capital markets become unwilling to continue rolling debt over. The capital flow reversal, if large enough, could also force the abandonment of an exchange rate peg and a large change in the nominal exchange rate. ...
Equilibrium Real Exchange Rate, Misalignment, and Export
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... Equilibrium real exchange rate is one of the most important concepts in open macroeconomics. The significant and persistent deviation of real exchange rates (RER) from equilibrium level, i.e., RER misalignment, could have implications on the balance of the economy. There is a vast theoretical and em ...
Quality, Trade, and Exchange Rate Pass-Through
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... 209 wine producers. The exporters in the sample are therefore multi-product …rms. In order to assess the quality of wines we rely on two well-known experts wine ratings, the Wine Spectator and Robert Parker. In both cases a quality score is assigned to a wine according to its name, grape, type, and ...
Slow disinflation process willl delay policy rate cuts
Slow disinflation process willl delay policy rate cuts

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© PG Worth Publishers, Do Not Duplicate
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... It is sometimes argued that increased integration of international financial markets should imply that interest rates in each country will come to be determined largely by world conditions rather than domestic conditions. It is then feared that as a result, domestic monetary policy will come to have ...
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... contrast to the exogenous view held by monetarists, it is pertinent to examine how the money supply process takes place in the endogenous money view. This is taken up in Chapter 3. Underlying the Post Keynesian view is the notion introduced by Keynes that investment activity, funded by bank credit, ...
ANNUAL REPORT (July 1990 - December 1991) April 1992
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... Equity prices moved sharply higher during the quarter, especially in March, with the Nikkei 225 index rising by 14%. These gains have been sustained since the end of March, which suggests that they were not purely seasonal changes in advance of the end of the fiscal year. There appeared to have been ...
NBER WORKING PAPER SERIES FISCAL VERSUS NET CAPITAL FLOW CONCERNS
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... allocate savings to preferred sectors. Capital outflow controls help prevent capital flight in response to domestic regulations, and therefore are a key ingredient of financial repression. The revenues from financial repression can be substantial. Giovannini and de Melo (1993) showed that for some 2 ...
Experimental Study on China’s Interest Rate Policy Output Effect
Experimental Study on China’s Interest Rate Policy Output Effect

... Interest rate policy is the guiding principle and measure the monetary authorities takes to control interest rate for specialized macro-economic goal, and it is an important part of the monetary policy. Whether interest rate policy can improve economic growth depends on whether the interest rate and ...
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... Monetary conditions continued to ease over the second half of 1997 in response to prospects for declining inflation. On the basis of our inflation projections and the risks surrounding the outlook, the Bank’s assessment is that a level of monetary conditions around 650 on the Monetary Conditions Ind ...
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... Whereas monetary policy was previously formulated without any particular emphasis on public disclosure, most central banks now attach considerable importance to transparency and predictability. This is partly because monetary policy has been revised in many countries from rule-based regimes linked t ...
Monetary Issues in the Middle East and North Africa Region
Monetary Issues in the Middle East and North Africa Region

... CBs operating a fully-credible fixed exchange rate regime need to consider how best to manage liquidity (reserve money balances at the CB) within the financial system and, ideally, promote market development with appropriate incentives. This section discusses operational differences between corridor ...
Effects of Tariffs and Real Exchange Rates on Job Reallocation
Effects of Tariffs and Real Exchange Rates on Job Reallocation

... productive ones, new information is revealed after policy changes. Firms partly learn how well they adapt to the new market place after they have been operating under the new conditions for some time, as with any change in the economic environment. Some firms may realize they are not competitive rel ...
An Analysis of International Imbalances and the
An Analysis of International Imbalances and the

Why Do Emerging Markets Liberalize Capital Outflow Controls? Fiscal versus
Why Do Emerging Markets Liberalize Capital Outflow Controls? Fiscal versus

... liberalize outflows to manage the concerns posed by surging NKI for fear of losing these revenues, but may find it easier to liberalize when there are no revenues to be lost. In fact, EMEs did liberalize outflow policy substantially in the 2000s. Most of the outflow liberalizations took place in the ...
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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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