Relationships between Currency Carry Trade and Stock
... lies with investors’ risk appetite. During the period of extreme market turbulence, many investors preferred to turn their targeted investments into safe-haven assets such as yen or US Treasury bonds, thereby reducing demands and liquidity in the markets of riskier assets, specifically US stocks. St ...
... lies with investors’ risk appetite. During the period of extreme market turbulence, many investors preferred to turn their targeted investments into safe-haven assets such as yen or US Treasury bonds, thereby reducing demands and liquidity in the markets of riskier assets, specifically US stocks. St ...
Doc - Europa.eu
... The composition of trade in goods and services has also evolved over time. Rich countries increasingly trade similar, but differentiated, goods and services between themselves (intraindustry trade). Multinational firms now play an important role in the global economy and are frequently able to slice ...
... The composition of trade in goods and services has also evolved over time. Rich countries increasingly trade similar, but differentiated, goods and services between themselves (intraindustry trade). Multinational firms now play an important role in the global economy and are frequently able to slice ...
Explaining Inflation with a Classical Dichotomy Model and Switching
... changing the monetary policy regime. In Lucas (1982), money is the only source of inflation but in Mexico that was the case only from 1932 to 1982. From 1983 to 2000 this role was played by the exchange rate and from 2001 onwards an inflation target regime was adopted. We use the model to propose a no ...
... changing the monetary policy regime. In Lucas (1982), money is the only source of inflation but in Mexico that was the case only from 1932 to 1982. From 1983 to 2000 this role was played by the exchange rate and from 2001 onwards an inflation target regime was adopted. We use the model to propose a no ...
DIFFERENCES IN EXCHANGE RATE PASS
... end, for Italy that figure is only about 11%. The distribution of non-euro area imports also varies widely across different product categories. Electric and electronic machinery, Basic manufactures and Mineral fuels account for the largest portion of non-euro area imports across all countries in th ...
... end, for Italy that figure is only about 11%. The distribution of non-euro area imports also varies widely across different product categories. Electric and electronic machinery, Basic manufactures and Mineral fuels account for the largest portion of non-euro area imports across all countries in th ...
How do exchange rate movements affect Chinese exports? – A firm
... China’s tremendous export growth and increasing influence in global economy is reason enough to direct attention to that country. China’s export shipment to the world market more than quadrupled in 8 years, from 1999-2007, during which China joined the WTO in 2001. In Figure 1 we show China’s recent ...
... China’s tremendous export growth and increasing influence in global economy is reason enough to direct attention to that country. China’s export shipment to the world market more than quadrupled in 8 years, from 1999-2007, during which China joined the WTO in 2001. In Figure 1 we show China’s recent ...
the credit-anstalt myth
... levels of debt and foreign capital flight were behind the Hungarian crisis. In particular, I have identified four important claims in the Hungarian literature’s interpretation of the crisis. First, authors argue that the financial system’s demand for liquidity emerged in 1931 because their foreign c ...
... levels of debt and foreign capital flight were behind the Hungarian crisis. In particular, I have identified four important claims in the Hungarian literature’s interpretation of the crisis. First, authors argue that the financial system’s demand for liquidity emerged in 1931 because their foreign c ...
Monetary Policy Strategies for Emerging Market Countries
... currency board was not exempt from a sudden loss of confidence from domestic and foreign investors, and that the Argentine banking system was not prepared to cope with those shocks. The Argentine central bank had its lender of last resort role constrained by the Convertibility Law, yet it mitigated ...
... currency board was not exempt from a sudden loss of confidence from domestic and foreign investors, and that the Argentine banking system was not prepared to cope with those shocks. The Argentine central bank had its lender of last resort role constrained by the Convertibility Law, yet it mitigated ...
IMF World Economic Outlook, May 1998-
... scale.80 A banking crisis may be so extensive as to assume systemic proportions. Systemic financial crises are potentially severe disruptions of financial markets that, by impairing markets’ ability to function effectively, can have large adverse effects on the real economy. A systemic financial cri ...
... scale.80 A banking crisis may be so extensive as to assume systemic proportions. Systemic financial crises are potentially severe disruptions of financial markets that, by impairing markets’ ability to function effectively, can have large adverse effects on the real economy. A systemic financial cri ...
On the trade impact of nominal exchange rate volatility
... the US, France). Two countries that have chosen to peg to the same anchor will therefore experience low bilateral exchange rate variability. I turn this observation into an identification strategy by first estimating the probability that two countries are pegged to the same anchor, and then using th ...
... the US, France). Two countries that have chosen to peg to the same anchor will therefore experience low bilateral exchange rate variability. I turn this observation into an identification strategy by first estimating the probability that two countries are pegged to the same anchor, and then using th ...
This PDF is a selection from a published volume from... National Bureau of Economic Research
... In order to analyze the evolution of capital account restrictions, I constructed a new index on capital mobility that combines information from Quinn (2003) and Mody and Murshid (2002), with information from country-specific sources.6 In creating this new index, a three-steps procedure was followed: ...
... In order to analyze the evolution of capital account restrictions, I constructed a new index on capital mobility that combines information from Quinn (2003) and Mody and Murshid (2002), with information from country-specific sources.6 In creating this new index, a three-steps procedure was followed: ...
CHAPTER 12—EXCHANGE-RATE DETERMINATION MULTIPLE
... 21. Under a system of floating exchange rates, relatively low productivity and high inflation rates in the United States result in: a. An increase in the demand for foreign currency, a decrease in the supply of foreign currency, and a depreciation in the dollar b. An increase in the demand for forei ...
... 21. Under a system of floating exchange rates, relatively low productivity and high inflation rates in the United States result in: a. An increase in the demand for foreign currency, a decrease in the supply of foreign currency, and a depreciation in the dollar b. An increase in the demand for forei ...
Exchange rate regimes in Latin America
... Regimes in Latin America Roberto Frenkel and Martín Rapetti ...
... Regimes in Latin America Roberto Frenkel and Martín Rapetti ...
World Economic Outlook, October 2015, Chapter 3: Exchange Rates
... of GDP increase in real net exports. The figures around this average response vary widely across economies (from 0.5 percent to 3.1 percent). It takes a number of years for the effects to fully materialize, but much of the adjustment occurs in the first year. The export increase associated with curr ...
... of GDP increase in real net exports. The figures around this average response vary widely across economies (from 0.5 percent to 3.1 percent). It takes a number of years for the effects to fully materialize, but much of the adjustment occurs in the first year. The export increase associated with curr ...
CHAPTER 21: Open-Economy Macroeconomics: The Balance of
... EQUILIBRIUM OUTPUT (INCOME) IN AN OPEN ECONOMY The Trade Feedback Effect trade feedback effect The tendency for an increase in the economic activity of one country to lead to a worldwide increase in economic activity, which then feeds back to that country. ...
... EQUILIBRIUM OUTPUT (INCOME) IN AN OPEN ECONOMY The Trade Feedback Effect trade feedback effect The tendency for an increase in the economic activity of one country to lead to a worldwide increase in economic activity, which then feeds back to that country. ...
Chapter 20
... The dollar would have to appreciate by more than 55.96 percent for the strategy to backfire. 13. Financing Since the Asian Crisis. Bradenton, Inc., has a foreign subsidiary in Asia that commonly obtained short-term financing from local banks prior to the Asian crisis. Explain why the firm may not be ...
... The dollar would have to appreciate by more than 55.96 percent for the strategy to backfire. 13. Financing Since the Asian Crisis. Bradenton, Inc., has a foreign subsidiary in Asia that commonly obtained short-term financing from local banks prior to the Asian crisis. Explain why the firm may not be ...
Inflation Targeting and Business Cycle - Berkeley-Haas
... flexible exchange rate from business cycle disturbances originating abroad.” His reasoning is that a positive domestic real shock raises the domestic interest rate, attracting foreign capital and appreciating the exchange rate. Similarly, with fixed rates, business cycles cause by real shocks of la ...
... flexible exchange rate from business cycle disturbances originating abroad.” His reasoning is that a positive domestic real shock raises the domestic interest rate, attracting foreign capital and appreciating the exchange rate. Similarly, with fixed rates, business cycles cause by real shocks of la ...
Exchange rate exposure among European firms
... independent of exchange rate movements. Empirically, this definition offers the convenience of allowing exposure to be measured as the coefficients in a linear regression of stock returns on rates of change in exchange rates. The present paper provides evidence on the direction and magnitude of curr ...
... independent of exchange rate movements. Empirically, this definition offers the convenience of allowing exposure to be measured as the coefficients in a linear regression of stock returns on rates of change in exchange rates. The present paper provides evidence on the direction and magnitude of curr ...
Chapter 15
... Exchange Rates & Inflation (cont.) • So if a country’s institutions and central bank make it prone to inflation, it is less likely to end up with hyper-inflation with fixed rates than with flexible rates • If not inflation-prone, flexible rates with smoothing are better ...
... Exchange Rates & Inflation (cont.) • So if a country’s institutions and central bank make it prone to inflation, it is less likely to end up with hyper-inflation with fixed rates than with flexible rates • If not inflation-prone, flexible rates with smoothing are better ...
Capital Controls and Monetary Policy in Developing Countries
... Developing Countries José Antonio Cordero and Juan Antonio Montecino ...
... Developing Countries José Antonio Cordero and Juan Antonio Montecino ...
Currency war
Currency war, also known as competitive devaluation, is a condition in international affairs where countries compete against each other to achieve a relatively low exchange rate for their own currency. As the price to buy a country's currency falls so too does the price of exports. Imports to the country become more expensive. So domestic industry, and thus employment, receives a boost in demand from both domestic and foreign markets. However, the price increase for imports can harm citizens' purchasing power. The policy can also trigger retaliatory action by other countries which in turn can lead to a general decline in international trade, harming all countries.Competitive devaluation has been rare through most of history as countries have generally preferred to maintain a high value for their currency. Countries have generally allowed market forces to work, or have participated in systems of managed exchanges rates. An exception occurred when currency war broke out in the 1930s. As countries abandoned the Gold Standard during the Great Depression, they used currency devaluations to stimulate their economies. Since this effectively pushes unemployment overseas, trading partners quickly retaliated with their own devaluations. The period is considered to have been an adverse situation for all concerned, as unpredictable changes in exchange rates reduced overall international trade.According to Guido Mantega, the Brazilian Minister for Finance, a global currency war broke out in 2010. This view was echoed by numerous other government officials and financial journalists from around the world. Other senior policy makers and journalists suggested the phrase ""currency war"" overstated the extent of hostility. With a few exceptions, such as Mantega, even commentators who agreed there had been a currency war in 2010 generally concluded that it had fizzled out by mid-2011.States engaging in possible competitive devaluation since 2010 have used a mix of policy tools, including direct government intervention, the imposition of capital controls, and, indirectly, quantitative easing. While many countries experienced undesirable upward pressure on their exchange rates and took part in the ongoing arguments, the most notable dimension of the 2010–11 episode was the rhetorical conflict between the United States and China over the valuation of the yuan. In January 2013, measures announced by Japan which were expected to devalue its currency sparked concern of a possible second 21st century currency war breaking out, this time with the principal source of tension being not China versus the US, but Japan versus the Eurozone. By late February, concerns of a new outbreak of currency war had been mostly allayed, after the G7 and G20 issued statements committing to avoid competitive devaluation. After the European Central Bank launched a fresh programme of quantitative easing in January 2015, there was once again an intensification of discussion about currency war.