An extended dynamic IS-LM model of exchange rate adjustments
... The foreign exchange market is crucial to international economic co-operations. It facilitates international trade and transactions. Nonetheless, disturbances generated in one part of this interlinked global economy can also be transmitted and magnified through the foreign exchange market as one of ...
... The foreign exchange market is crucial to international economic co-operations. It facilitates international trade and transactions. Nonetheless, disturbances generated in one part of this interlinked global economy can also be transmitted and magnified through the foreign exchange market as one of ...
This PDF is a selection from a published volume from... National Bureau of Economic Research
... by relaxations of capital controls, which enabled them to engage in outbound FDI. Consequently, FDI inflows are somewhat larger than the data for net inflows make them appear. While portfolio flows are sometimes considered volatile, in India’s experience, there has been no episode of a significant r ...
... by relaxations of capital controls, which enabled them to engage in outbound FDI. Consequently, FDI inflows are somewhat larger than the data for net inflows make them appear. While portfolio flows are sometimes considered volatile, in India’s experience, there has been no episode of a significant r ...
Leaving the euro: A practical guide
... And the dollar-euro is by far the most active currency pair, comprising 28% of all trades. These factors mean that we cannot blithely assume that a euro break-up, or even the departure of a single member, would be childishly easy, along the lines of some past monetary break-ups, or currency devaluat ...
... And the dollar-euro is by far the most active currency pair, comprising 28% of all trades. These factors mean that we cannot blithely assume that a euro break-up, or even the departure of a single member, would be childishly easy, along the lines of some past monetary break-ups, or currency devaluat ...
Pricing-to-Market - The Review of Economic Studies
... how the relative markup between foreign and home markets implied by optimal reset prices responds to movements in nominal exchange rates between the two markets. By focusing on optimal reset prices, we isolate that part of pricing-to-market that is not mechanically due to price stickiness. Our data ...
... how the relative markup between foreign and home markets implied by optimal reset prices responds to movements in nominal exchange rates between the two markets. By focusing on optimal reset prices, we isolate that part of pricing-to-market that is not mechanically due to price stickiness. Our data ...
This PDF is a selection from an out-of-print volume from... of Economic Research
... between Korea and its major trading partners have been relatively quickly reflected in the won’s exchange rate against the U.S. dollar. This may very well have been inevitable if Korea’s export prices were to remain competitive while its rate of inflation was relatively high. It was also shown that ...
... between Korea and its major trading partners have been relatively quickly reflected in the won’s exchange rate against the U.S. dollar. This may very well have been inevitable if Korea’s export prices were to remain competitive while its rate of inflation was relatively high. It was also shown that ...
Determinants of Currency Risk Premiums
... As shown in Table 1A, when equation (2) is estimated using OLS the 15 estimated values of ψ s are consistently negative and greater than unity in absolute value. With two exceptions, all the estimates are significant at the 5 percent level. Frankel and Chinn (1991) note that OLS estimates can likely ...
... As shown in Table 1A, when equation (2) is estimated using OLS the 15 estimated values of ψ s are consistently negative and greater than unity in absolute value. With two exceptions, all the estimates are significant at the 5 percent level. Frankel and Chinn (1991) note that OLS estimates can likely ...
NBER WORKING PAPER SERIES MONETARY POLICIES FOR DEVELOPING COUNTRIES: Haizhou Huang
... assumed away in this paper. It is sometimes thought that a similar type of inflation target would benefit developing countries as well. For example, the IMF has advised several transition and emerging market economies to adopt inflation targeting with a similarly narrow range. The empirical evidence ...
... assumed away in this paper. It is sometimes thought that a similar type of inflation target would benefit developing countries as well. For example, the IMF has advised several transition and emerging market economies to adopt inflation targeting with a similarly narrow range. The empirical evidence ...
A Guided Tour of the Market Microstructure Approach to
... growth a new equilibrium exchange rate is reached without any change in investors’ portfolios. The meagre explanatory power of these traditional models alongside the empirical evidence showing the importance of micro-structural aspects of the functioning of equity markets in explaining short-term mo ...
... growth a new equilibrium exchange rate is reached without any change in investors’ portfolios. The meagre explanatory power of these traditional models alongside the empirical evidence showing the importance of micro-structural aspects of the functioning of equity markets in explaining short-term mo ...
Put-Call Parity, Transaction Costs and PHLX Currency
... are time synchronized, because the FX and interest rates used to determine the PCP deviations are not synchronized, the deviations do not necessarily represent actual arbitrage opportunities. However, due to PHLX market organization and trading conventions used to price and trade PHLX foreign exchan ...
... are time synchronized, because the FX and interest rates used to determine the PCP deviations are not synchronized, the deviations do not necessarily represent actual arbitrage opportunities. However, due to PHLX market organization and trading conventions used to price and trade PHLX foreign exchan ...
exchange rate pass-through in india
... Apart from market structure, international market segmentation, (non) homogeneity of products, trade openness, and currency of trade invoicing, inflation plays a very crucial role to the nature of pass-through. Taylor (2000), Choudhuri and Hakura (2001), and Zorzi et al. (2007) provide evidence on ...
... Apart from market structure, international market segmentation, (non) homogeneity of products, trade openness, and currency of trade invoicing, inflation plays a very crucial role to the nature of pass-through. Taylor (2000), Choudhuri and Hakura (2001), and Zorzi et al. (2007) provide evidence on ...
The Zero Bound in an Open Economy: A Foolproof Way of Escaping from
... liquidity trap. These emergency measures would include unorthodox open-market operations in long government bonds and corporate bonds, direct lending to the private sector, foreign-exchange interventions, and fiscal and monetary cooperation including a money-financed fiscal expansion involving gover ...
... liquidity trap. These emergency measures would include unorthodox open-market operations in long government bonds and corporate bonds, direct lending to the private sector, foreign-exchange interventions, and fiscal and monetary cooperation including a money-financed fiscal expansion involving gover ...
Chapter 3 Types of Monetary Standards The original meaning of the
... variants of a gold standard is that gold has intrinsic value and therefore serves as a standard of value for all other goods.* In addition, supporters view gold as a store of value because new production adds*only a small fraction to the stock accumulated over centuries, hence prices denominated in ...
... variants of a gold standard is that gold has intrinsic value and therefore serves as a standard of value for all other goods.* In addition, supporters view gold as a store of value because new production adds*only a small fraction to the stock accumulated over centuries, hence prices denominated in ...
Trade, Prices, and the Exchange Rate with Heterogeneous
... where cjN is the household j’s consumption of the nontraded good and cjT (ω) is its consumption of the differentiated variety ω ∈ Ω, where Ω is the continuum set of differentiated varieties sold at Home. The varieties can be Home or Foreign-produced. Parameters α and η stand for the level of substi ...
... where cjN is the household j’s consumption of the nontraded good and cjT (ω) is its consumption of the differentiated variety ω ∈ Ω, where Ω is the continuum set of differentiated varieties sold at Home. The varieties can be Home or Foreign-produced. Parameters α and η stand for the level of substi ...
A Common Currency Peg in East Asia?
... are small and very open; (2) in addition to a substantial number of intense bilateral trade links, intraregional trade is high and rising (Goto and Hamada, 1994); (3) cross-border investment flows of foreign direct investment are extensive and a large portion of the associated debt denominated in y ...
... are small and very open; (2) in addition to a substantial number of intense bilateral trade links, intraregional trade is high and rising (Goto and Hamada, 1994); (3) cross-border investment flows of foreign direct investment are extensive and a large portion of the associated debt denominated in y ...
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... One area that has not been sufficiently addressed in previous work is the role of severe currency and/or balance of payments crises on output growth and how these events interact with subsequent participation in IMF programs. We argue that Heckman’s (1979) Inverse Mills Ratio (IMR) approach does no ...
... One area that has not been sufficiently addressed in previous work is the role of severe currency and/or balance of payments crises on output growth and how these events interact with subsequent participation in IMF programs. We argue that Heckman’s (1979) Inverse Mills Ratio (IMR) approach does no ...
The Yugoslav Hyperinflation of 1992-1994
... The Yugoslav hyperinflation of 1992–1994 was historically unique and significant due to its extreme peak and duration. At its peak, in January 1994, the monthly inflation rate reached 313 million percent, thus becoming the second highest recorded rate of inflation after the Hungarian hyperinflation ...
... The Yugoslav hyperinflation of 1992–1994 was historically unique and significant due to its extreme peak and duration. At its peak, in January 1994, the monthly inflation rate reached 313 million percent, thus becoming the second highest recorded rate of inflation after the Hungarian hyperinflation ...
The Usefulness of factor models in forecasting the exchange
... forecasting the exchange rate of the Brazilian Real to the US Dollar after the adoption the floating exchange rate regime in Brazil. The use of factor models might be helpful in forecasting the exchange rate if (1) the information embedded in the common movements of the exchange rates of various cou ...
... forecasting the exchange rate of the Brazilian Real to the US Dollar after the adoption the floating exchange rate regime in Brazil. The use of factor models might be helpful in forecasting the exchange rate if (1) the information embedded in the common movements of the exchange rates of various cou ...
Linkages Between Exchange Rate Policy and Macroeconomic
... exchange rates may lead to better performance because they provide better insulation and adjustment to external shocks. On the other hand, exchange rate uncertainty may have a negative impact on investment, and therefore growth, when investment is irreversible (e.g., Dixit and Pindyke (1994), Aizenm ...
... exchange rates may lead to better performance because they provide better insulation and adjustment to external shocks. On the other hand, exchange rate uncertainty may have a negative impact on investment, and therefore growth, when investment is irreversible (e.g., Dixit and Pindyke (1994), Aizenm ...
Interest rates and exchange rates
... Capital can nowadays move freely between the world’s main financial centres, which means that we would expect rates of return on similar assets to be the same in different countries: if they were not, then investors would move funds from the low-yielding asset to the high-yielding one. Because asset ...
... Capital can nowadays move freely between the world’s main financial centres, which means that we would expect rates of return on similar assets to be the same in different countries: if they were not, then investors would move funds from the low-yielding asset to the high-yielding one. Because asset ...
Submissions on EMU from leading academics
... tests, HM Treasury has approached a number of leading academics since summer 2002 to request an update of work which they had previously undertaken on the economics of monetary unions. 46 academics were approached, whose work has spanned the range of economic issues covered in the Treasury’s prelimi ...
... tests, HM Treasury has approached a number of leading academics since summer 2002 to request an update of work which they had previously undertaken on the economics of monetary unions. 46 academics were approached, whose work has spanned the range of economic issues covered in the Treasury’s prelimi ...
Financial globalization and exchange rates
... Financial globalization has been one of the most important trends in the world economy in recent decades. This process has involved the accumulation of large gross international investment positions, with foreign asset and liability positions sharply rising, whether scaled by GDP or by domestic fina ...
... Financial globalization has been one of the most important trends in the world economy in recent decades. This process has involved the accumulation of large gross international investment positions, with foreign asset and liability positions sharply rising, whether scaled by GDP or by domestic fina ...
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.