Chapter 18
... The Long-Term Financing Decision • To make the long-term financing decision, the MNC must determine the amount of funds needed, forecast the price (interest rate) at which the bond may be issued, and forecast the exchange rates of the borrowed currency for the times when it has to make paymen ...
... The Long-Term Financing Decision • To make the long-term financing decision, the MNC must determine the amount of funds needed, forecast the price (interest rate) at which the bond may be issued, and forecast the exchange rates of the borrowed currency for the times when it has to make paymen ...
Economics for Today 2nd edition Irvin B. Tucker
... accounts records the purchase and sale of financial assets and real estate between the United States and other nations? a. The balance of trade account. b. The current account. c. The capital account. d. The balance of payments account. C. The balance of trade is the value of a nation’s merchandise ...
... accounts records the purchase and sale of financial assets and real estate between the United States and other nations? a. The balance of trade account. b. The current account. c. The capital account. d. The balance of payments account. C. The balance of trade is the value of a nation’s merchandise ...
Monetary Policy in the Euro-zone Does `one size fit all`? (This case
... the service-sector boom suggests the need for higher interest rates, while manufacturing requires lower interest rates to reduce the exchange rate and make exports more competitive). Different response of different sectors to interest rate changes (e.g. manufacturing tends to be harder hit by appr ...
... the service-sector boom suggests the need for higher interest rates, while manufacturing requires lower interest rates to reduce the exchange rate and make exports more competitive). Different response of different sectors to interest rate changes (e.g. manufacturing tends to be harder hit by appr ...
Internationalisation of currency in East Asia
... foreign holdings of internationalised currencies, found that the shares are determined by the economic size of the country, the inflation rate, the exchange rate variability, and the size of the relevant financial centre (as measured by the turnover in its foreign exchange market). Furthermore, they ...
... foreign holdings of internationalised currencies, found that the shares are determined by the economic size of the country, the inflation rate, the exchange rate variability, and the size of the relevant financial centre (as measured by the turnover in its foreign exchange market). Furthermore, they ...
BM410-18 International Analysis and
... • Variations in return related to the possibility that foreign exchange may be restricted and free flow of capital may not be allowed Can you hedge these risks? • It is not possible to completely hedge all foreign investments. You may be able to hedge part of those risks, but not all of them ...
... • Variations in return related to the possibility that foreign exchange may be restricted and free flow of capital may not be allowed Can you hedge these risks? • It is not possible to completely hedge all foreign investments. You may be able to hedge part of those risks, but not all of them ...
Open Economy Macro:
... “I will argue that over the past decade a combination of diverse forces has created a significant increase in the global supply of saving--a global saving glut--which helps to explain both the increase in the U.S. current account deficit and the relatively low level of long-term real interest rates ...
... “I will argue that over the past decade a combination of diverse forces has created a significant increase in the global supply of saving--a global saving glut--which helps to explain both the increase in the U.S. current account deficit and the relatively low level of long-term real interest rates ...
Appreciation of the exchange rate
... A unit of labour in Russia can produce either 10 barrels of oil per period OR 5 litres of whisky. A unit of labour in Scotland can produce either 20 barrels of oil OR 40 litres of whisky. ...
... A unit of labour in Russia can produce either 10 barrels of oil per period OR 5 litres of whisky. A unit of labour in Scotland can produce either 20 barrels of oil OR 40 litres of whisky. ...
Midterm 3
... The graph above shows how a firm’s profits respond to a change in the firm’s price. Suppose the firm’s “perfect” price is P* at which it would earn a profit of π* If the firm incurs a small menu cost mc in order to carry out a change in prices, the firm will choose to keep prices constant as long as ...
... The graph above shows how a firm’s profits respond to a change in the firm’s price. Suppose the firm’s “perfect” price is P* at which it would earn a profit of π* If the firm incurs a small menu cost mc in order to carry out a change in prices, the firm will choose to keep prices constant as long as ...
The International Monetary System
... Exchange rates fluctuated as countries widely used “predatory” depreciations of their currencies as a means of gaining advantage in the world export market. Attempts were made to restore the gold standard, but participants lacked the political will to “follow the rules of the game”. The result for i ...
... Exchange rates fluctuated as countries widely used “predatory” depreciations of their currencies as a means of gaining advantage in the world export market. Attempts were made to restore the gold standard, but participants lacked the political will to “follow the rules of the game”. The result for i ...
Shalendra-D-Sharma - Lahore School of Economics
... and bonds payable in gold and foreign currency had to be maintained at a level no less than 100 per cent of the monetary base. Domestic money creation was also strictly limited as the currency board explicitly forbade monetising government deficits, that is, printing money to pay the bills. Indeed, ...
... and bonds payable in gold and foreign currency had to be maintained at a level no less than 100 per cent of the monetary base. Domestic money creation was also strictly limited as the currency board explicitly forbade monetising government deficits, that is, printing money to pay the bills. Indeed, ...
Argentina. Some facts.
... Corporate bankruptcies will weigh heavily on the Argentine banks and may cause widespread bank failures. The result will be increases in the already high unemployment rates. The adverse impact of an overvalued exchange rate and excessive foreign debt are certainly not unique to Argentina. These two ...
... Corporate bankruptcies will weigh heavily on the Argentine banks and may cause widespread bank failures. The result will be increases in the already high unemployment rates. The adverse impact of an overvalued exchange rate and excessive foreign debt are certainly not unique to Argentina. These two ...
New Perspectives on Financial Globalization IMF Economic Forum
... • In the 1960s, foreign authorities supported $ in part on geopolitical grounds. • Germany & Japan offset the expenses of stationing U.S. troops on bases there, so as to save the US from balance of payments deficit. • In 1991, Saudi Arabia, Kuwait, and others paid for the financial cost of the war a ...
... • In the 1960s, foreign authorities supported $ in part on geopolitical grounds. • Germany & Japan offset the expenses of stationing U.S. troops on bases there, so as to save the US from balance of payments deficit. • In 1991, Saudi Arabia, Kuwait, and others paid for the financial cost of the war a ...
6.2 John M. Keynes: Proposal for an International Currency Union
... Keynes formulated his Bancor plan as a solution for the period after the Second World War. During the interwar period there was a lot of irritation to the global financial markets and the stock market crash of October 1929 was the beginning of the collapse of the system and made it necessary to sear ...
... Keynes formulated his Bancor plan as a solution for the period after the Second World War. During the interwar period there was a lot of irritation to the global financial markets and the stock market crash of October 1929 was the beginning of the collapse of the system and made it necessary to sear ...
Pegged exchange rate
... while the price level in the U.S. increased by 50 percent …the U.S. demand for British goods (and pounds) would increase … as U.S. exports to Britain would be relatively more expensive they would decline and thereby cause the supply of pounds to fall. • These forces would cause the dollar to depreci ...
... while the price level in the U.S. increased by 50 percent …the U.S. demand for British goods (and pounds) would increase … as U.S. exports to Britain would be relatively more expensive they would decline and thereby cause the supply of pounds to fall. • These forces would cause the dollar to depreci ...
Chapter 38 – fiscal policy - The Good, the Bad and the Economist
... poss increase in govt rev, poss improvement in current account (as Y falls…and thus M fall) I missed! Dampen “swings” in business cycle by increased T and lower G during “boom”…and then using the fiscal surplus to stimulate AD during “downturn/recession”. ...
... poss increase in govt rev, poss improvement in current account (as Y falls…and thus M fall) I missed! Dampen “swings” in business cycle by increased T and lower G during “boom”…and then using the fiscal surplus to stimulate AD during “downturn/recession”. ...
Price and wage flexibility
... • It means that a change in the interest rates affects only nominal variables in the economy such as prices, wages and exchange rates, having no effect on real variables like GDP, employment and consumption • Hence, from this standpoint, the costs of losing direct control over national monetary poli ...
... • It means that a change in the interest rates affects only nominal variables in the economy such as prices, wages and exchange rates, having no effect on real variables like GDP, employment and consumption • Hence, from this standpoint, the costs of losing direct control over national monetary poli ...
Chapter 14:
... The language barrier combines with the other legal and natural barriers for factor movement and serves as an impediment to labor mobility. In this case, the country could benefit from adopting a flexible exchange rate. If a flexible exchange rate were in effect, the increased trade deficit would lea ...
... The language barrier combines with the other legal and natural barriers for factor movement and serves as an impediment to labor mobility. In this case, the country could benefit from adopting a flexible exchange rate. If a flexible exchange rate were in effect, the increased trade deficit would lea ...
chapter 9
... centering on Figure 9-2, and the equilibrium determination of the real exchange rate would be of particular interest to students. The long run predictions of the quantity theory of money have been discussed at several points in this book. As an extension of these discussions, the purchasing power p ...
... centering on Figure 9-2, and the equilibrium determination of the real exchange rate would be of particular interest to students. The long run predictions of the quantity theory of money have been discussed at several points in this book. As an extension of these discussions, the purchasing power p ...
banking crises
... Two most robust predicators of crises: domestic credit growth and real currency appreciation A third robust determinant of EMEs’ crisis probabilities: an emerging country’s level of foreign exchange reserves is a significant factor determining the probability of future crisis To the extent that emer ...
... Two most robust predicators of crises: domestic credit growth and real currency appreciation A third robust determinant of EMEs’ crisis probabilities: an emerging country’s level of foreign exchange reserves is a significant factor determining the probability of future crisis To the extent that emer ...
Prudential Policy for Peggers - Faculty Directory | Berkeley-Haas
... “Mirage of Fixed Exchange Rates” “The striking conclusion is that, aside from some small tourism economies, oil sheikdoms, and highly dependent principalities, there is literally only a handful of countries in the world today that have continuously maintained tightly fixed exchange rates against any ...
... “Mirage of Fixed Exchange Rates” “The striking conclusion is that, aside from some small tourism economies, oil sheikdoms, and highly dependent principalities, there is literally only a handful of countries in the world today that have continuously maintained tightly fixed exchange rates against any ...
Foreign exchange rate
... Borrowers and Lenders, Debtors and Creditors • A country that is borrowing more from the rest of the world than it is lending to it – is a net borrower. – has a current account deficit and a capital ...
... Borrowers and Lenders, Debtors and Creditors • A country that is borrowing more from the rest of the world than it is lending to it – is a net borrower. – has a current account deficit and a capital ...
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.