The Euro and the Dollar: Toward a "Finance G-2"?
... experienced its first recession in a decade. A bubble burst in financial markets around the world. The events of September 11, 2001, and two subsequent wars roiled the security environment. The exchange rate of the euro against the dollar dropped by more than 30 percent in less than two years and th ...
... experienced its first recession in a decade. A bubble burst in financial markets around the world. The events of September 11, 2001, and two subsequent wars roiled the security environment. The exchange rate of the euro against the dollar dropped by more than 30 percent in less than two years and th ...
Monetary Policy Transmission Mechanisms in Papua New Guinea
... (reduces) savings and relatively less (more) is spent on consumption. The income effect as stipulated by Milton Friedman’s permanent income hypothesis is that consumers’ decisions are based on current and discounted future incomes (Dornbusch and Fischer, 1994, p307). Higher (lower) interest rate red ...
... (reduces) savings and relatively less (more) is spent on consumption. The income effect as stipulated by Milton Friedman’s permanent income hypothesis is that consumers’ decisions are based on current and discounted future incomes (Dornbusch and Fischer, 1994, p307). Higher (lower) interest rate red ...
Reforming the International Monetary System
... provision. They will help to limit the effects of individual and systemic crises and to decrease their frequency. We make four principal recommendations. 1. Develop alternatives to US Treasuries as the dominant reserve asset, thereby accelerating the inevitable transition to a multipolar system. In ...
... provision. They will help to limit the effects of individual and systemic crises and to decrease their frequency. We make four principal recommendations. 1. Develop alternatives to US Treasuries as the dominant reserve asset, thereby accelerating the inevitable transition to a multipolar system. In ...
The Feasibility and the Path Selection of Renminbi Regionalization
... area “Optimum Currency Area” is constituted. When a system of fixed exchange rate is implemented in an area, the liquidity of essential factors is a balanced mechanism in the area. When a system of floating exchange rate is implemented outside an area, the floating exchange rate is a balanced mechan ...
... area “Optimum Currency Area” is constituted. When a system of fixed exchange rate is implemented in an area, the liquidity of essential factors is a balanced mechanism in the area. When a system of floating exchange rate is implemented outside an area, the floating exchange rate is a balanced mechan ...
Robert P. Flood Robert 3. Working Paper No. 1089 Hodrick
... with a deterioration in the terms of trade. In light of these facts, the dominant model of exchange—rate determination has become the one developed by Dornbusch (1976). ...
... with a deterioration in the terms of trade. In light of these facts, the dominant model of exchange—rate determination has become the one developed by Dornbusch (1976). ...
Powerpoints Macro Ch13 R
... A yield curve is a curve that shows the relationship between interest rates and bonds’ time to maturity. An inverted yield curve is one in which the short-term rate is higher than the long-term rate ...
... A yield curve is a curve that shows the relationship between interest rates and bonds’ time to maturity. An inverted yield curve is one in which the short-term rate is higher than the long-term rate ...
This PDF is a selection from an out-of-print volume from... of Economic Research
... As far as short-run adjustment is concerned, Eastwood and Venables (1982) have discussed the issue in a Dornbusch-style model. They point out that one would not expect the discovery of oil to lead to a general recession because the requisite deterioration in competitiveness occurs instantaneously vi ...
... As far as short-run adjustment is concerned, Eastwood and Venables (1982) have discussed the issue in a Dornbusch-style model. They point out that one would not expect the discovery of oil to lead to a general recession because the requisite deterioration in competitiveness occurs instantaneously vi ...
Real Interest Rate
... • Panel (a) of the figure shows the market for loanable funds. As before, national saving is the source of the supply of loanable funds. Domestic investment and net capital outflow are the source of the demand for loanable funds. The equilibrium real interest rate(r1) brings the quantity of loanable ...
... • Panel (a) of the figure shows the market for loanable funds. As before, national saving is the source of the supply of loanable funds. Domestic investment and net capital outflow are the source of the demand for loanable funds. The equilibrium real interest rate(r1) brings the quantity of loanable ...
H o w N e w ... m a c r o e c o n o...
... This is a continuation of a series of articles on what the costs and benefits might be if New Zealand wer e to join a larger currency area, say if it were to enter into currency union with Australia, or to ‘dollarise’. The back-drop is public debate, in New Zealand and in some other countries, on cu ...
... This is a continuation of a series of articles on what the costs and benefits might be if New Zealand wer e to join a larger currency area, say if it were to enter into currency union with Australia, or to ‘dollarise’. The back-drop is public debate, in New Zealand and in some other countries, on cu ...
NBER WORKING PAPER SERIES EXTERNAL ADJUSTMENT Maurice Obstfeld Working Paper
... risks. The resulting capital flight and the associated gold hemorrhage often led to a much more rapid and possibly bigger depreciation than would have occurred absent speculation. Sometimes, instead or in addition, capital controls were part of the policy response. The interwar experience heavily co ...
... risks. The resulting capital flight and the associated gold hemorrhage often led to a much more rapid and possibly bigger depreciation than would have occurred absent speculation. Sometimes, instead or in addition, capital controls were part of the policy response. The interwar experience heavily co ...
Does inflation or currency depreciation drive monetary policy in
... If uncovered interest rate parity (UIP) holds reflecting the assumption of perfect capital mobility, then it suggests a link between i and e equating the expected return on domestic and foreign assets: et = et+1 + (i∗ − it ) ...
... If uncovered interest rate parity (UIP) holds reflecting the assumption of perfect capital mobility, then it suggests a link between i and e equating the expected return on domestic and foreign assets: et = et+1 + (i∗ − it ) ...
Introduction
... The Effect of Government Spending with a Floating Exchange Rate • In all three pairs of panels, an increase in government expenditures causes the IS schedule to shift rightward, inducing initial increases in the equilibrium nominal interest rate from R1 to R and in the level of equilibrium real i ...
... The Effect of Government Spending with a Floating Exchange Rate • In all three pairs of panels, an increase in government expenditures causes the IS schedule to shift rightward, inducing initial increases in the equilibrium nominal interest rate from R1 to R and in the level of equilibrium real i ...
“We`re All Connected”: Business Cycle Synchronization
... other types. Heathcote and Perri (2003) show that business cycles between the U.S. and the rest of industrialized countries have declined since 1980 and posit that financial integration has been playing a major role in the reduction of international co-movements. The model is also affected by the ex ...
... other types. Heathcote and Perri (2003) show that business cycles between the U.S. and the rest of industrialized countries have declined since 1980 and posit that financial integration has been playing a major role in the reduction of international co-movements. The model is also affected by the ex ...
Inflation, exchange rates and the role of monetary policy in
... advanced Western economies. Indeed from 1991 onwards, there has only been a weak correlation, or none at all, between monetary aggregates and either inflation or output. Interestingly, however, the correlation between money supply and inflation has been much higher from 2000, when the Central Bank s ...
... advanced Western economies. Indeed from 1991 onwards, there has only been a weak correlation, or none at all, between monetary aggregates and either inflation or output. Interestingly, however, the correlation between money supply and inflation has been much higher from 2000, when the Central Bank s ...
(ΔY) +
... (income adjustment). This reduces part of the original improvement in BOP. This simply means that the depreciation required to eliminate the deficit is larger than if automatic income adjustment is not present. ...
... (income adjustment). This reduces part of the original improvement in BOP. This simply means that the depreciation required to eliminate the deficit is larger than if automatic income adjustment is not present. ...
Dual Currency Investment – Important Facts Statement
... Currency risk - If the Investment Currency and/or Linked Currency is/are not your home currency, and you choose to convert it back to your home currency, or if you receive the Linked Currency and choose to convert it back to the Investment Currency upon maturity, you should note that exchange rate f ...
... Currency risk - If the Investment Currency and/or Linked Currency is/are not your home currency, and you choose to convert it back to your home currency, or if you receive the Linked Currency and choose to convert it back to the Investment Currency upon maturity, you should note that exchange rate f ...
Monetarism with Chinese Characteristics
... the yuan, more recently the PBC has tried to stem capital outflows by defending the yuan against the U.S. dollar, and in so doing is using up scare foreign exchange reserves. That is, the PBC is propping up the yuan-dollar rate by buying yuan in the foreign exchange market and selling dollars. To of ...
... the yuan, more recently the PBC has tried to stem capital outflows by defending the yuan against the U.S. dollar, and in so doing is using up scare foreign exchange reserves. That is, the PBC is propping up the yuan-dollar rate by buying yuan in the foreign exchange market and selling dollars. To of ...
The Impact of Monetary Policy Announcements
... De La Rianderie 1985)1 . By de…nition, a nominal exchange rate is the price of one currency in terms of another and since a currency is a type of asset, the price can be treated as an asset price. As such the price of an asset can change when the entire foreign exchange market alters its view of the ...
... De La Rianderie 1985)1 . By de…nition, a nominal exchange rate is the price of one currency in terms of another and since a currency is a type of asset, the price can be treated as an asset price. As such the price of an asset can change when the entire foreign exchange market alters its view of the ...
The Real Exchange Rate and US Manufacturing Profits
... elasticities are not constant, and markups decline with a rise in product prices, pass-through is less than complete even with constant marginal cost, and the dollar price of output sold abroad must rise relative to the domestic price, P^t. Our interest is not in pricing behavior, per se, but rather ...
... elasticities are not constant, and markups decline with a rise in product prices, pass-through is less than complete even with constant marginal cost, and the dollar price of output sold abroad must rise relative to the domestic price, P^t. Our interest is not in pricing behavior, per se, but rather ...
Targeting Inflation in Dollarized Economies(2)
... leads in the short term to nominal and real exchange rate appreciation, which in turn helps attenuate inflationary pressures through both direct and indirect channels. The direct channel reflects the impact of the exchange rate change on the change in the consumer price index (e.g., through the dome ...
... leads in the short term to nominal and real exchange rate appreciation, which in turn helps attenuate inflationary pressures through both direct and indirect channels. The direct channel reflects the impact of the exchange rate change on the change in the consumer price index (e.g., through the dome ...
29 THE MONETARY SYSTEM
... transactions can be made in terms of it), recognized easily as money (so people can perform transactions easily and quickly), divisible (so people can provide change), and difficult to counterfeit (so people will not print their own money). That is why nearly all countries use paper money with fancy ...
... transactions can be made in terms of it), recognized easily as money (so people can perform transactions easily and quickly), divisible (so people can provide change), and difficult to counterfeit (so people will not print their own money). That is why nearly all countries use paper money with fancy ...
Monetary Policy and Quantitative Easing in an Open Economy
... There is a vast and important literature on indeterminacy of monetary equilibria. Sargent and Wallace (1975) discussed the indeterminacy of the initial price level under interest rate policy; Lucas and Stokey (1987) derived the condition for the uniqueness of a recursive equilibrium with money suppl ...
... There is a vast and important literature on indeterminacy of monetary equilibria. Sargent and Wallace (1975) discussed the indeterminacy of the initial price level under interest rate policy; Lucas and Stokey (1987) derived the condition for the uniqueness of a recursive equilibrium with money suppl ...
Problem Set 8 – Some Answers FE312 Fall 2010 Rahman 1
... A recession means that there is downward pressure on aggregate demand – if this is happening due to weak demand for consumer goods or investments, for example, this will shift the IS* curve to the left. However, this also lowers the exchange rate, making domestic goods more competitive international ...
... A recession means that there is downward pressure on aggregate demand – if this is happening due to weak demand for consumer goods or investments, for example, this will shift the IS* curve to the left. However, this also lowers the exchange rate, making domestic goods more competitive international ...
EMU, Exchange Rate Volatility and Bid-Ask Spreads
... of traders: liquidity traders and informed traders. Liquidity traders’ transactions are driven by the needs for buying and selling goods and services and do not speculate. They buy or sell currencies due to the financing needs of their normal business activity, and are willing to pay a “fee” in orde ...
... of traders: liquidity traders and informed traders. Liquidity traders’ transactions are driven by the needs for buying and selling goods and services and do not speculate. They buy or sell currencies due to the financing needs of their normal business activity, and are willing to pay a “fee” in orde ...