Chapter 18
... § Each exchange that affects the net capital outflow, also affects net exports in the same amount. § For instance, if an economy is running a trade deficit, it must be financing the net purchase of goods and services by selling assets abroad. If it’s running a trade surplus, the excess in foreign ...
... § Each exchange that affects the net capital outflow, also affects net exports in the same amount. § For instance, if an economy is running a trade deficit, it must be financing the net purchase of goods and services by selling assets abroad. If it’s running a trade surplus, the excess in foreign ...
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... associated to exchange rate fluctuations may, therefore, be a reason of frustration for producers. Second, exchange rate volatility and prolonged deviations of currencies from their equilibrium levels often impose costs on the real economy that are asymmetric, between different types of producers an ...
... associated to exchange rate fluctuations may, therefore, be a reason of frustration for producers. Second, exchange rate volatility and prolonged deviations of currencies from their equilibrium levels often impose costs on the real economy that are asymmetric, between different types of producers an ...
Financial versus Monetary Mercantilism-Long
... We discuss in detail the implications of these regularities. The legacy of financial mercantilism led to deteriorating balance sheets of affected banks. The resultant financial fragility is more sustainable in times of rapid growth, but it may induce banking crises when growth flounders. As the swit ...
... We discuss in detail the implications of these regularities. The legacy of financial mercantilism led to deteriorating balance sheets of affected banks. The resultant financial fragility is more sustainable in times of rapid growth, but it may induce banking crises when growth flounders. As the swit ...
NBER WORKING PAPER SERIES 1880-1913 vs. 1972-1997
... of the original sin condition, strong financial development and agile responsiveness to crises seem to play a role in helping avoid crises. In fact, we find evidence that countries with significant or full-blown original sin can be divided into two subgroups. For example in the pre-1914 period, one ...
... of the original sin condition, strong financial development and agile responsiveness to crises seem to play a role in helping avoid crises. In fact, we find evidence that countries with significant or full-blown original sin can be divided into two subgroups. For example in the pre-1914 period, one ...
The Nixon Shock after 40 Years
... improvement in the balance-of-payments position of the United States, (ii) a more equitable sharing of the responsibilities for world security and economic progress, and (iii) a basic reform of the international monetary system’ (FRUS, 2001, 3: 423). The memo advocated using ‘the following measures ...
... improvement in the balance-of-payments position of the United States, (ii) a more equitable sharing of the responsibilities for world security and economic progress, and (iii) a basic reform of the international monetary system’ (FRUS, 2001, 3: 423). The memo advocated using ‘the following measures ...
Financial Globalization and Exchange Rates Philip R. Lane Gian Maria Milesi-Ferretti
... relationship depends on a number of factors. For instance, the impact of an exchange rate depreciation will depend on gross foreign asset and liability holdings (in addition to the net position); the currency composition of both sides of the international balance sheet; and the co-movement between e ...
... relationship depends on a number of factors. For instance, the impact of an exchange rate depreciation will depend on gross foreign asset and liability holdings (in addition to the net position); the currency composition of both sides of the international balance sheet; and the co-movement between e ...
Optimal Monetary Policy in an Open Emerging Market Economy
... to more muted real appreciation, which prevents the consumption of financially-included agents from falling as much. This leads to a relative output expansion, which closes the output gap, thus stabilizing real wages and hand-to-mouth consumption. Further, lower exchange rate volatility directly sta ...
... to more muted real appreciation, which prevents the consumption of financially-included agents from falling as much. This leads to a relative output expansion, which closes the output gap, thus stabilizing real wages and hand-to-mouth consumption. Further, lower exchange rate volatility directly sta ...
Foreign Exchange Intervention and Equilibrium Real Exchange Rates
... particular sample of countries is motivated by two reasons. First, we consider that intervention effects are likely to be important for the determination of the short-run dynamics of the six exchange rates for three reasons. (i) All six countries have adopted independently floating or managed float ...
... particular sample of countries is motivated by two reasons. First, we consider that intervention effects are likely to be important for the determination of the short-run dynamics of the six exchange rates for three reasons. (i) All six countries have adopted independently floating or managed float ...
Sectoral Analysis
... interfering with its operation. However, there is a force of modification of the operation of the IS-LM model in the open macro-economics. The degree of mobility of international capital flows and the choice of foreign exchange policy modify the operation of IS-LM. No country other than the might U. ...
... interfering with its operation. However, there is a force of modification of the operation of the IS-LM model in the open macro-economics. The degree of mobility of international capital flows and the choice of foreign exchange policy modify the operation of IS-LM. No country other than the might U. ...
NBER WORKING PAPER SERIES EXCHANGE RATE PASS-THROUGH, EXCHANGE RATE VOLATILITY, AND
... exchange rate might not lead to much substitution between domestically-produced goods and internationally-produced goods, because the relative prices of those goods do not change much for final users. If the exchange rate change has little effect on the behavior of final purchasers of goods, then it ...
... exchange rate might not lead to much substitution between domestically-produced goods and internationally-produced goods, because the relative prices of those goods do not change much for final users. If the exchange rate change has little effect on the behavior of final purchasers of goods, then it ...
(TZS) versus the US Dollar (USD) and other major world currenc
... Exporters felt that a good exports strategy would help Tanzania’s development as at present the country still imports many things which can potentially be produced locally such as milk and juice. The more Tanzania can produce within the country for exporting purposes the more likely it is to gain i ...
... Exporters felt that a good exports strategy would help Tanzania’s development as at present the country still imports many things which can potentially be produced locally such as milk and juice. The more Tanzania can produce within the country for exporting purposes the more likely it is to gain i ...
EMU Break-up
... the first two years is over 12%. This is substantially greater than the losses that followed the demise of Lehman Brothers in September 2008. The complexity of financial and trade inter-linkages are such that the short term consequences would be traumatic. In the first year, Eurozone GDP might fall ...
... the first two years is over 12%. This is substantially greater than the losses that followed the demise of Lehman Brothers in September 2008. The complexity of financial and trade inter-linkages are such that the short term consequences would be traumatic. In the first year, Eurozone GDP might fall ...
Rules- Based International Monetary Reform
... supplement, to deviations of interest rates from normal policy. Currency intervention has been used widely in recent years by many emerging market countries. However, currency interventions can have adverse side effects even if they temporarily prevent appreciation. If they are not accompanied by ca ...
... supplement, to deviations of interest rates from normal policy. Currency intervention has been used widely in recent years by many emerging market countries. However, currency interventions can have adverse side effects even if they temporarily prevent appreciation. If they are not accompanied by ca ...
NBER WORKING PAPER SERIES REAL EXCHANGE RATE TARGETING AND MACROECONOMIC INSTABILITY Martín Uribe
... between the current level of the real exchange rate and expected devaluations implied by the model. In a small open economy, the nominal interest rate is, loosely speaking, an increasing function of the expected devaluation rate. Hence, an increase in next period’s expected devaluation rate causes a ...
... between the current level of the real exchange rate and expected devaluations implied by the model. In a small open economy, the nominal interest rate is, loosely speaking, an increasing function of the expected devaluation rate. Hence, an increase in next period’s expected devaluation rate causes a ...
Exchange Rates - Carleton University
... into gold. The main difference between this system and the aforementioned gold standard is that only one country actively maintains a gold supply. Other countries must be allowed to freely convert their currency into the currency of the gold holding country. ...
... into gold. The main difference between this system and the aforementioned gold standard is that only one country actively maintains a gold supply. Other countries must be allowed to freely convert their currency into the currency of the gold holding country. ...
МИНИСТЕРСТВО ОБРАЗОВАНИЯ РОССИЙСКОЙ ФЕДЕРАЦИИ
... above Px1/Py1 but below Px2/Py2 the first country will specialize in production of good X and the other two countries will produce good Y. When the world relative price is equal to Px2/Py2 the second country starts to produce good Y and so forth. In general, as long as the ratio of unit labour requi ...
... above Px1/Py1 but below Px2/Py2 the first country will specialize in production of good X and the other two countries will produce good Y. When the world relative price is equal to Px2/Py2 the second country starts to produce good Y and so forth. In general, as long as the ratio of unit labour requi ...
Political Institutions and Exchange-Rate
... Exiting a fixed exchange rate in response to exchange market pressure imposes considerably larger reputation costs on autocratic policy-makers than on democratic policymakers because fixed exchange rates are the only institutional instrument available to them to commit to monetary stability. This incr ...
... Exiting a fixed exchange rate in response to exchange market pressure imposes considerably larger reputation costs on autocratic policy-makers than on democratic policymakers because fixed exchange rates are the only institutional instrument available to them to commit to monetary stability. This incr ...
Development and Globalization: Facts and Figures 2012
... This chapter discusses the role of macroeconomic policies to mitigate the effects of the crisis and to reinvigorate economic growth, while reducing unemployment and inequality, and putting the global economy on a sustainable growth path. In that vein, it takes a closer look at the monetary, fiscal a ...
... This chapter discusses the role of macroeconomic policies to mitigate the effects of the crisis and to reinvigorate economic growth, while reducing unemployment and inequality, and putting the global economy on a sustainable growth path. In that vein, it takes a closer look at the monetary, fiscal a ...
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... agricultural commodities like rice, wheat, coffee and sugar. The share of global seafood production, internationally traded, has been rapidly increasing during the last decades and reached 39 percent in 2010. The increased trade is a strong indication of the increasing opportunities in the seafood m ...
... agricultural commodities like rice, wheat, coffee and sugar. The share of global seafood production, internationally traded, has been rapidly increasing during the last decades and reached 39 percent in 2010. The increased trade is a strong indication of the increasing opportunities in the seafood m ...
2 - Economics | Bilkent University
... To summarize, currency depreciation increases net exports and increases the cost of production. Similarly, currency appreciation decreases net exports and the cost of production. The combined effects of demand and supply channels determine the net results of exchange rate fluctuations on real outpu ...
... To summarize, currency depreciation increases net exports and increases the cost of production. Similarly, currency appreciation decreases net exports and the cost of production. The combined effects of demand and supply channels determine the net results of exchange rate fluctuations on real outpu ...
Assessing the Impact of Exchange Rate Risk on Banks Performance
... Prior to the monetary-approach emphasis of the 1970s, it was common to emphasize international trade flows as primary determinants of exchange rates. This was due, in part, to the fact that governments maintained tight restrictions on international flows of financial capital. The role of exchange ra ...
... Prior to the monetary-approach emphasis of the 1970s, it was common to emphasize international trade flows as primary determinants of exchange rates. This was due, in part, to the fact that governments maintained tight restrictions on international flows of financial capital. The role of exchange ra ...
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.