HOT MONEY AND COLD COMFORT
... occurs, perhaps the insolvency of one or more large banks, a run by depositors, a drop in export demand, or sudden and tumultuous pressure on a fixed or crawling peg exchange rate, and a currency crisis starts. Hot capital flows out of the country, loans from foreign institutions are not rolled over ...
... occurs, perhaps the insolvency of one or more large banks, a run by depositors, a drop in export demand, or sudden and tumultuous pressure on a fixed or crawling peg exchange rate, and a currency crisis starts. Hot capital flows out of the country, loans from foreign institutions are not rolled over ...
6/17/99+ - Harvard Kennedy School
... MPA/ID program. It particularly emphasizes the international dimension. The general perspective is that of developing countries and other small open economies, defined as those for whom the terms of trade are determined on world markets and for whom foreign income, inflation and interest rates can a ...
... MPA/ID program. It particularly emphasizes the international dimension. The general perspective is that of developing countries and other small open economies, defined as those for whom the terms of trade are determined on world markets and for whom foreign income, inflation and interest rates can a ...
Martin Feldstein Avoiding Currency Crises
... Thailand not devalue while it still had substantial foreign exchange reserves? Why did Thailand keep supporting the bhat until reserves were exhausted and the country was forced to devalue, leading to massive deflation of economic activity and a painful IMF program? There were, I believe, four disti ...
... Thailand not devalue while it still had substantial foreign exchange reserves? Why did Thailand keep supporting the bhat until reserves were exhausted and the country was forced to devalue, leading to massive deflation of economic activity and a painful IMF program? There were, I believe, four disti ...
Is the Second Great Depression approaching?
... world trade. This share has declined but remains significant, at one-third of merchandise trade in 2011. Holding out for a hero: who leads? The magnitude of the Great Depression, argued Kindleberger, was because of “British inability and United States unwillingness” to assume economic leadership. ...
... world trade. This share has declined but remains significant, at one-third of merchandise trade in 2011. Holding out for a hero: who leads? The magnitude of the Great Depression, argued Kindleberger, was because of “British inability and United States unwillingness” to assume economic leadership. ...
Effects of a unified GCC currency
... According to Al-Shammari (2007, p. 15), in the event that two member countries have to make a cross border sale agreement of a commodity, the exchange rate volatility will cause a major hindrance to the trade. A decline in one nation’s relative to the other has the implication of reducing the amount ...
... According to Al-Shammari (2007, p. 15), in the event that two member countries have to make a cross border sale agreement of a commodity, the exchange rate volatility will cause a major hindrance to the trade. A decline in one nation’s relative to the other has the implication of reducing the amount ...
Slajd 1 - Warsaw School of Economics
... The cost of reserve maintainance- the appreciation of the remninbi increases the value of liabilities and decreases the value of the assets held in USD The costs of interventions- high levels of reserves cause credit expansion and inflationary pressure despite sterilization Cost for Chinese st ...
... The cost of reserve maintainance- the appreciation of the remninbi increases the value of liabilities and decreases the value of the assets held in USD The costs of interventions- high levels of reserves cause credit expansion and inflationary pressure despite sterilization Cost for Chinese st ...
International Business Strategy, Management & the New
... Demise of the Bretton Woods System • Rising government spending stimulated the economy and U.S. citizens began spending more on imported goods, aggravating the U.S. balance of payments. • The U.S. acquired trade deficits with Japan, Germany, and other European countries- eventually demand for U.S. ...
... Demise of the Bretton Woods System • Rising government spending stimulated the economy and U.S. citizens began spending more on imported goods, aggravating the U.S. balance of payments. • The U.S. acquired trade deficits with Japan, Germany, and other European countries- eventually demand for U.S. ...
Interest Rate Spreads and Deviations from Purchasing Power Parity
... The theory of Purchasing Power Parity (PPP) suggests that exchange rates between currencies should reflect purchasing power with respect to commonly traded commodities across economies. For instance, if there is little difference in wheat available for purchase in India, which costs maybe 220 Indian ...
... The theory of Purchasing Power Parity (PPP) suggests that exchange rates between currencies should reflect purchasing power with respect to commonly traded commodities across economies. For instance, if there is little difference in wheat available for purchase in India, which costs maybe 220 Indian ...
AP Macro review graphs
... • Which country has the absolute advantage in each product? • Which country has the comparative advantage in each product? • What are Djibouti’s opportunity costs for the 2 goods? Botswana’s? • If 4 jet packs are traded for 1 time machine, how will each country benefit? ...
... • Which country has the absolute advantage in each product? • Which country has the comparative advantage in each product? • What are Djibouti’s opportunity costs for the 2 goods? Botswana’s? • If 4 jet packs are traded for 1 time machine, how will each country benefit? ...
The implications of introduction of Euro on Dollar
... Introduction Chronology of world currencies Dollar as international currency Euro as emerging international currency Dollar VS Euro Foreign Reserve currency OPEC choice of currency ...
... Introduction Chronology of world currencies Dollar as international currency Euro as emerging international currency Dollar VS Euro Foreign Reserve currency OPEC choice of currency ...
Key dates in financial history - Center for Financial Stability
... futures contracts for anything other than a physical commodity. 1973: United States devalues, then floats the dollar; other major currencies also float, ending the Bretton Wood system in practice. A period of higher inflation follows in most countries. Western European countries attempt to reduce ex ...
... futures contracts for anything other than a physical commodity. 1973: United States devalues, then floats the dollar; other major currencies also float, ending the Bretton Wood system in practice. A period of higher inflation follows in most countries. Western European countries attempt to reduce ex ...
background
... capital from overseas. As it became apparent that the economic impact of the Asian Crisis was deeper than had been expected, fiscal targets in Asian countries were relaxed to take account of falling government tax revenues. Monetary policy A high interest rate policy has the twin effects of reducing ...
... capital from overseas. As it became apparent that the economic impact of the Asian Crisis was deeper than had been expected, fiscal targets in Asian countries were relaxed to take account of falling government tax revenues. Monetary policy A high interest rate policy has the twin effects of reducing ...
ECCU_en.pdf
... Grenadines. Expenditure on personnel emoluments (2.0%) and goods and services (6.0%) also increased year-on-year between January and June, with the largest increase seen in Dominica (17%). In spite of this overall performance, the fiscal situation remains tenuous as evidenced by the fact that only t ...
... Grenadines. Expenditure on personnel emoluments (2.0%) and goods and services (6.0%) also increased year-on-year between January and June, with the largest increase seen in Dominica (17%). In spite of this overall performance, the fiscal situation remains tenuous as evidenced by the fact that only t ...
The International Gold Standard, 1879-1913
... Each country was responsible for maintaining its exchange rate within ±1% of the adopted par value by buying or selling foreign reserves as necessary. The U.S. was only responsible for maintaining the gold parity. This created strong demand for $ reserves and allowed the U.S. to run trade deficits. ...
... Each country was responsible for maintaining its exchange rate within ±1% of the adopted par value by buying or selling foreign reserves as necessary. The U.S. was only responsible for maintaining the gold parity. This created strong demand for $ reserves and allowed the U.S. to run trade deficits. ...
A Constant Unit of Account Richard W. Rahn
... higher rates of inflation, including a return to the double-digit inflation that was last experienced in the late 1970s. It is true that the Fed can prevent a return to a period of high inflation by refusing to monetize U.S. government spending. If one believes that supersized deficits—even double-d ...
... higher rates of inflation, including a return to the double-digit inflation that was last experienced in the late 1970s. It is true that the Fed can prevent a return to a period of high inflation by refusing to monetize U.S. government spending. If one believes that supersized deficits—even double-d ...
Slide 1
... Only government M, B matter. Private M (checks), foreign M (dollarized), private B (“liquidity”) do not matter for P. Exchange rate reflects “faith in government,” not money stocks, and is volatile. Inflation still feels like excess “aggregate demand” or “money chasing goods.” ...
... Only government M, B matter. Private M (checks), foreign M (dollarized), private B (“liquidity”) do not matter for P. Exchange rate reflects “faith in government,” not money stocks, and is volatile. Inflation still feels like excess “aggregate demand” or “money chasing goods.” ...
Guidance Note - Insurance Certificates of Currency
... It will not always be appropriate to rely on a certificate of currency alone as evidence that the contractor holds the insurances required. In relation to statutory workers' compensation policies, a certificate of insurance is generally sufficient evidence that appropriate insurance is held as the t ...
... It will not always be appropriate to rely on a certificate of currency alone as evidence that the contractor holds the insurances required. In relation to statutory workers' compensation policies, a certificate of insurance is generally sufficient evidence that appropriate insurance is held as the t ...
Contents of the course - Solvay Brussels School of
... 1. FX rate could fluctuate by max. 1%, and be reajusted only in case of « fundamental disequilibrium » 2. Pool of currencies contributed by members countries to help deficit countries funding their temporary disequilibrium, in a regime of fixed exchange rates. Institution set up to administer the ...
... 1. FX rate could fluctuate by max. 1%, and be reajusted only in case of « fundamental disequilibrium » 2. Pool of currencies contributed by members countries to help deficit countries funding their temporary disequilibrium, in a regime of fixed exchange rates. Institution set up to administer the ...
chapte r 4
... Exchange Rates Many commercial banks attempt to capitalize on their forecasts of anticipated exchange rate movements in the foreign exchange market ...
... Exchange Rates Many commercial banks attempt to capitalize on their forecasts of anticipated exchange rate movements in the foreign exchange market ...
Slide_8-2
... A large and continuous trade deficit can be a problem: • It may be the result of industrial decline in the economy • It means more income is leaving the economy, leaving less to spend on domestic goods and services • The value of the currency will fall on the foreign exchange market making imports m ...
... A large and continuous trade deficit can be a problem: • It may be the result of industrial decline in the economy • It means more income is leaving the economy, leaving less to spend on domestic goods and services • The value of the currency will fall on the foreign exchange market making imports m ...
NYU-SEC4part1 - Wharton Finance Department
... and expropriate the foreign lenders. For developed countries with sophisticated political institutions this will not be an issue. For emerging economies this possibility may be quite likely in which case an “inflation premium” will be charged. This may make borrowing in domestic currency expensi ...
... and expropriate the foreign lenders. For developed countries with sophisticated political institutions this will not be an issue. For emerging economies this possibility may be quite likely in which case an “inflation premium” will be charged. This may make borrowing in domestic currency expensi ...
Problem Set 4
... (B) The expected return on these assets relative to one another. (C) The liquidity of these assets relative to one another. (D) The riskiness of these assets relative to one another. (Answer: (B)) 4. “A country is always worse off when its currency is weak (falls in values).” Is this statement true, ...
... (B) The expected return on these assets relative to one another. (C) The liquidity of these assets relative to one another. (D) The riskiness of these assets relative to one another. (Answer: (B)) 4. “A country is always worse off when its currency is weak (falls in values).” Is this statement true, ...
Currency Regimes: The Latin American Experience Chris Dailey- Senior Sophister
... 1999 was 736 basis points, while in Panama (the only dollarized Latin American country) this averaged 405 basis points. This provides a good indicator of the potential reduction in country risk premia that could be possible if countries such as Argentina were to dollarize. The global economy may hav ...
... 1999 was 736 basis points, while in Panama (the only dollarized Latin American country) this averaged 405 basis points. This provides a good indicator of the potential reduction in country risk premia that could be possible if countries such as Argentina were to dollarize. The global economy may hav ...
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.