fixed exchange rates
... to rise. As investors switch from foreign currency to dollars, the dollar appreciates. The more the dollar appreciates, the more investors expect it to depreciate in the future. The initial dollar appreciation must be such that the expected future depreciation compensates for the increase in the U.S ...
... to rise. As investors switch from foreign currency to dollars, the dollar appreciates. The more the dollar appreciates, the more investors expect it to depreciate in the future. The initial dollar appreciation must be such that the expected future depreciation compensates for the increase in the U.S ...
overcoming the zero bound with negative interest rate policy
... • The zero nominal interest rate bound puts a floor under the real interest rate at minus the expected rate of inflation • If 2% targeted inflation is expected, then the zero bound puts a floor on real interest rate policy at -2% • Interest rate policy is then constrained from shadowing a negative “ ...
... • The zero nominal interest rate bound puts a floor under the real interest rate at minus the expected rate of inflation • If 2% targeted inflation is expected, then the zero bound puts a floor on real interest rate policy at -2% • Interest rate policy is then constrained from shadowing a negative “ ...
AN
... money, it loses all seigniorage. This paper uses an optimal inflation tax approach to analyze the consequences for optimal rates of income taxation and welfare of the alternative exchange rate and monetary arrangements. From the viewpoint of seigniorage, a system in which the country is free to dete ...
... money, it loses all seigniorage. This paper uses an optimal inflation tax approach to analyze the consequences for optimal rates of income taxation and welfare of the alternative exchange rate and monetary arrangements. From the viewpoint of seigniorage, a system in which the country is free to dete ...
The role of exchange rate flexibility, budget institutions and political
... member states lie below the reference value, they have been increasing rapidly in some countries e.g. in the Czech and Slovak Republic. According to the European Central Bank (ECB, 2004) maintaining the overall or primary deficit ratios at their current level in the Czech Republic, Hungary and Polan ...
... member states lie below the reference value, they have been increasing rapidly in some countries e.g. in the Czech and Slovak Republic. According to the European Central Bank (ECB, 2004) maintaining the overall or primary deficit ratios at their current level in the Czech Republic, Hungary and Polan ...
Chapter 8
... Exchange Rate Overshooting • The exchange rate is said to overshoot when its immediate response to a change is greater than its long run response. • Overshooting is predicted to occur when monetary policy has an immediate effect on interest rates, but not on prices and (expected) inflation. • Overs ...
... Exchange Rate Overshooting • The exchange rate is said to overshoot when its immediate response to a change is greater than its long run response. • Overshooting is predicted to occur when monetary policy has an immediate effect on interest rates, but not on prices and (expected) inflation. • Overs ...
EMP – A Note on Empiricism and Foreign Exchange Markets
... Huizinga (1987) found a tendency – albeit statistically insignificant – towards reversion to the mean. Abuaf and Jorion (1990), studying exchange rate data for six European Union countries plus Canada, Japan, Norway and Switzerland for the period from 1973 to 1987, and applying more sophisticated st ...
... Huizinga (1987) found a tendency – albeit statistically insignificant – towards reversion to the mean. Abuaf and Jorion (1990), studying exchange rate data for six European Union countries plus Canada, Japan, Norway and Switzerland for the period from 1973 to 1987, and applying more sophisticated st ...
ASIA AND THE IMF
... these are likely to become more distorting and less effective. And controls cannot prevent a devaluation if domestic policies are fundamentally inconsistent with maintaining the peg. Once controls are in place it is never easy to remove them. They should be removed gradually, at a time when the exch ...
... these are likely to become more distorting and less effective. And controls cannot prevent a devaluation if domestic policies are fundamentally inconsistent with maintaining the peg. Once controls are in place it is never easy to remove them. They should be removed gradually, at a time when the exch ...
ch20_5e
... Some countries operate under fixed exchange rates. These countries maintain a fixed exchange rate in terms of some foreign currency. Some peg their currency to the dollar. Some countries operate under a crawling peg. These countries typically have inflation rates that exceed the U.S. inflation rate. ...
... Some countries operate under fixed exchange rates. These countries maintain a fixed exchange rate in terms of some foreign currency. Some peg their currency to the dollar. Some countries operate under a crawling peg. These countries typically have inflation rates that exceed the U.S. inflation rate. ...
Document
... increasing exports, thereby freeing foreign exchange necessary for investment. Incomplete; essentially a growth-oriented model with emphasis on a small number of real variables and no financial side. Relative prices and induced substitution effects among production factors (and their possible im ...
... increasing exports, thereby freeing foreign exchange necessary for investment. Incomplete; essentially a growth-oriented model with emphasis on a small number of real variables and no financial side. Relative prices and induced substitution effects among production factors (and their possible im ...
Monetary Policies Goals, Strategy, and Tactics
... However, the central bank does not target those goals directly, because it usually take a considerable time lag to see the impact of its policy change. It will be too late for the central bank to wait and see the policy effect. As a result, the central bank aims to influence a set of quantitative or ...
... However, the central bank does not target those goals directly, because it usually take a considerable time lag to see the impact of its policy change. It will be too late for the central bank to wait and see the policy effect. As a result, the central bank aims to influence a set of quantitative or ...
File
... * In our example, the Fed injects $100 in reserves into the banking system, by purchasing a $100 T-bill from the First National Bank. To see how that increases the money supply, we need to keep track of the increase in checking deposits. After the Fed's purchase, First National has $100 in excess re ...
... * In our example, the Fed injects $100 in reserves into the banking system, by purchasing a $100 T-bill from the First National Bank. To see how that increases the money supply, we need to keep track of the increase in checking deposits. After the Fed's purchase, First National has $100 in excess re ...
NBER WORKING PAPER SERIES THE UNSUSTAINABLE US CURRENT ACCOUNT POSITION REVISITED
... Four years ago, we published a paper (Obstfeld and Rogoff 2000a) arguing that the United States current account deficit—then running at 4.4% of GDP—was on an unsustainable trajectory over the medium term, and that its inevitable reversal would precipitate a change in the real exchange rate of 12 to ...
... Four years ago, we published a paper (Obstfeld and Rogoff 2000a) arguing that the United States current account deficit—then running at 4.4% of GDP—was on an unsustainable trajectory over the medium term, and that its inevitable reversal would precipitate a change in the real exchange rate of 12 to ...
Macroeconomics Case Study: Chinese Macroeconomic Policy
... Developments in Exchange Rate Regime In 1994, the Chinese exchange rate regime was reformed. The multiple exchange rates of the RMB vis-a-vis the U.S. dollar were unified. Since then, the RMB has been pegged to the U.S. dollar at a relatively stable rate until July 21st 2005. Following the 2% revalua ...
... Developments in Exchange Rate Regime In 1994, the Chinese exchange rate regime was reformed. The multiple exchange rates of the RMB vis-a-vis the U.S. dollar were unified. Since then, the RMB has been pegged to the U.S. dollar at a relatively stable rate until July 21st 2005. Following the 2% revalua ...
CESifo Working Paper no. 3164
... a small economy – which would apply to each European economy in the 20th century - have to face a choice that of the three typically desirable policies of a stable exchange rate, open capital markets and autonomous monetary policy, only two can be mutually consistent. We can add that policies that ...
... a small economy – which would apply to each European economy in the 20th century - have to face a choice that of the three typically desirable policies of a stable exchange rate, open capital markets and autonomous monetary policy, only two can be mutually consistent. We can add that policies that ...
Exchange Rate Regimes in East Asia – Recent Trends
... The monetary authorities of East Asian countries learnt a lesson that it is inadequate for a country with close economic relationships not only with the United States but also other countries to adopt either an official or de facto dollar-peg system from the experience of the Asian currency crisis i ...
... The monetary authorities of East Asian countries learnt a lesson that it is inadequate for a country with close economic relationships not only with the United States but also other countries to adopt either an official or de facto dollar-peg system from the experience of the Asian currency crisis i ...
PBOC Monetary Policy Reform
... With interest rate deregulation, banks should be able to charge different borrowers different interest rates, according to their credit risks. But, to facilitate information exchange, there would be a need for a reference rate indicating to the market what price banks are generally setting on their ...
... With interest rate deregulation, banks should be able to charge different borrowers different interest rates, according to their credit risks. But, to facilitate information exchange, there would be a need for a reference rate indicating to the market what price banks are generally setting on their ...
Paul R. Krugman Working DEINDUSTRIALIZATION, REINDUSTRIALIZATION, AND THE REAL
... uncertainty per se act to limit the responsivesness of resource reallocation to real exchange rate movements. In turn, this reluctance of factors to move widens the range of real exchange rate variation, so that larger movements of the real exchange rate are needed to accommodate transitory, unpredi ...
... uncertainty per se act to limit the responsivesness of resource reallocation to real exchange rate movements. In turn, this reluctance of factors to move widens the range of real exchange rate variation, so that larger movements of the real exchange rate are needed to accommodate transitory, unpredi ...
NBER WORKING PAPER SERIES
... 4. There would be less transmission of disturbances internationally. (A corollary is that there would be less need for international coordination of those policies; enhancing independence was considered one of the chief virtues of the system, as ...
... 4. There would be less transmission of disturbances internationally. (A corollary is that there would be less need for international coordination of those policies; enhancing independence was considered one of the chief virtues of the system, as ...
Efficient Risk Reducing Strategies by International Diversification
... index data are taken from Morgan and Stanley Capital International, which provide national stock index prices measured in local currencies. Each of the indices is value weighted and could be a representative of an investable domestic stock index fund. To analyse the total returns from the Hungarian ...
... index data are taken from Morgan and Stanley Capital International, which provide national stock index prices measured in local currencies. Each of the indices is value weighted and could be a representative of an investable domestic stock index fund. To analyse the total returns from the Hungarian ...