The Credit Channel in Middle Income Countries
... debt in foreign currency. Along the equilibrium path the amplification mechanism works as follows. An increase in the domestic lending rate leads to higher debt service obligations and thus implies that firms can now borrow less at each level of net worth. Lower borrowing results in lower investment ...
... debt in foreign currency. Along the equilibrium path the amplification mechanism works as follows. An increase in the domestic lending rate leads to higher debt service obligations and thus implies that firms can now borrow less at each level of net worth. Lower borrowing results in lower investment ...
Chapter 13
... • Nominal exchange rates – In the past, many currencies operated under a fixedexchange-rate system, in which exchange rates were determined by governments • The exchange rates were fixed because the central banks in those countries offered to buy or sell the currencies at the fixed exchange rate • E ...
... • Nominal exchange rates – In the past, many currencies operated under a fixedexchange-rate system, in which exchange rates were determined by governments • The exchange rates were fixed because the central banks in those countries offered to buy or sell the currencies at the fixed exchange rate • E ...
This PDF is a selection from an out-of-print volume from... of Economic Research
... formed the basis of the original Bretton Woods system that ruled the international monetary system from 1948 to 1973. According to the original International Monetary Fund (IMF) Articles of Agreement, a country could alter its peg if it was facing a “fundamental disequilibrium.”In this subsection I ...
... formed the basis of the original Bretton Woods system that ruled the international monetary system from 1948 to 1973. According to the original International Monetary Fund (IMF) Articles of Agreement, a country could alter its peg if it was facing a “fundamental disequilibrium.”In this subsection I ...
NBER WORKING PAPER SERIES THE REAL EFFECTS OF FOREIGN OF CURRENCY SUBSTITUTION
... James Tobin, in his classic work on money and growth (1965), proposed that changes in the inflation rate might have a real economic effect even if ...
... James Tobin, in his classic work on money and growth (1965), proposed that changes in the inflation rate might have a real economic effect even if ...
ge07 Egert 4676541 en
... level of nontradable goods. If wages tend to equalize across the open and sheltered sectors, and prices in the sheltered sector are determined mainly by wage costs, the price of nontradable goods will be lower in the low-productivity country than in high-productivity countries. However, if the less ...
... level of nontradable goods. If wages tend to equalize across the open and sheltered sectors, and prices in the sheltered sector are determined mainly by wage costs, the price of nontradable goods will be lower in the low-productivity country than in high-productivity countries. However, if the less ...
Regional pull vs global push factors
... events set in train the strong multi-year capital flows to Asia. The reverse occurred in mid-2013 in the “taper tantrum” episode. While the period of heightened market volatility was triggered by speculation over an earlier than expected US tapering, concerns over China’s growth prospects are also l ...
... events set in train the strong multi-year capital flows to Asia. The reverse occurred in mid-2013 in the “taper tantrum” episode. While the period of heightened market volatility was triggered by speculation over an earlier than expected US tapering, concerns over China’s growth prospects are also l ...
Risk-Premia, Carry-Trade Dynamics, and Speculative
... returns over UIP. Seminal articles in this area are Bilson (1981) and Fama (1984), surveys of the literature include Hodrick (1987), Froot and Thaler (1990), Taylor (1995), Engel (1996), Sarno and Taylor (2003). From an economic perspective the statistical rejection of UIP might point at the existen ...
... returns over UIP. Seminal articles in this area are Bilson (1981) and Fama (1984), surveys of the literature include Hodrick (1987), Froot and Thaler (1990), Taylor (1995), Engel (1996), Sarno and Taylor (2003). From an economic perspective the statistical rejection of UIP might point at the existen ...
China`s Exchange Rate Policy - Peterson Institute for International
... is particularly likely to be the case for small countries that are price takers in international goods and capital markets. Capital controls, in theory, could prevent large inflows (outflows) when domestic interest rates are higher (lower) than foreign rates, but in practice it is difficult to maint ...
... is particularly likely to be the case for small countries that are price takers in international goods and capital markets. Capital controls, in theory, could prevent large inflows (outflows) when domestic interest rates are higher (lower) than foreign rates, but in practice it is difficult to maint ...
Can Inflation Targeting Work in Emerging Market Countries
... see Calvo, 1999a, Calvo, 2001 and Calvo and Mendoza, 2000) has been quite skeptical of inflation targeting as a monetary policy strategy for emerging market countries.1 He worried that allowing too much discretion to policymakers in the weak institutional environment of emerging market countries mig ...
... see Calvo, 1999a, Calvo, 2001 and Calvo and Mendoza, 2000) has been quite skeptical of inflation targeting as a monetary policy strategy for emerging market countries.1 He worried that allowing too much discretion to policymakers in the weak institutional environment of emerging market countries mig ...
A Transaction Data Study of the Forward Bias Puzzle
... generate forward bias. On the other hand, results such as those of Breedon and Vitale (2010) and Breedon and Ranaldo (2008) suggest that order flow could be an important element of the FX risk premium through standard portfolio-balance effects and so could contribute to the forward bias through tha ...
... generate forward bias. On the other hand, results such as those of Breedon and Vitale (2010) and Breedon and Ranaldo (2008) suggest that order flow could be an important element of the FX risk premium through standard portfolio-balance effects and so could contribute to the forward bias through tha ...
Economic and Social Survey of Asia and the Pacific 2010: Year-end Update
... broad-based recovery in the region as a whole by partly boosting domestic demand in the larger economies and partly boosting trade between them and between the different subregions. For such an approach to be effective, the time has come for the Asia-Pacific region to deepen the process of integrati ...
... broad-based recovery in the region as a whole by partly boosting domestic demand in the larger economies and partly boosting trade between them and between the different subregions. For such an approach to be effective, the time has come for the Asia-Pacific region to deepen the process of integrati ...
NBER WORKING PAPER SERIES
... sticky in terms of the bread numéraire, the bakers’guild would have a non-trivial monetary stabilisation policy role. The welfare signi…cance of the numéraire when there are nominal wage or price rigidities survives even in a cashless economy, interpreted here as in Woodford (2003) as the limit of a ...
... sticky in terms of the bread numéraire, the bakers’guild would have a non-trivial monetary stabilisation policy role. The welfare signi…cance of the numéraire when there are nominal wage or price rigidities survives even in a cashless economy, interpreted here as in Woodford (2003) as the limit of a ...
AbootalebiShahrooz1979
... currency financial statements and rejected the current noncurrent method on the grounds that the latter method was based solely on balance sheet classification and so served no theoretically sound and relevant purpose. 4 Official acceptance of the monetary - nonmonetary method was followed by the is ...
... currency financial statements and rejected the current noncurrent method on the grounds that the latter method was based solely on balance sheet classification and so served no theoretically sound and relevant purpose. 4 Official acceptance of the monetary - nonmonetary method was followed by the is ...
Macroeconomic Stability: The More the Better?
... Sources: World Bank, World Development Indicators; Institute of International Finance. Note: The countries featured are those for which complete data are available from the late 1970s on. The availability of consistent fiscal balance data is very limited, particularly for low-income countries. ...
... Sources: World Bank, World Development Indicators; Institute of International Finance. Note: The countries featured are those for which complete data are available from the late 1970s on. The availability of consistent fiscal balance data is very limited, particularly for low-income countries. ...
Europe and Global Imbalances Philip R. Lane Department of Economics, TCD
... linkages in the adjustment process. The acceleration of financial globalization in recent years means that gross holdings of external assets and liabilities are now much larger than in previous adjustment episodes, such as the turnaround in the U.S. current account deficit in the late 1980s. In turn ...
... linkages in the adjustment process. The acceleration of financial globalization in recent years means that gross holdings of external assets and liabilities are now much larger than in previous adjustment episodes, such as the turnaround in the U.S. current account deficit in the late 1980s. In turn ...
Rating the Rating Agencies - Peterson Institute for International
... perform much worse for both currency and banking crises than do the better indicators of economic fundamentals. The noise-to-signal ratio is higher than one for both types of crises, suggesting a similar incidence of good signals and false alarms. Hence, not surprisingly, the marginal contribution t ...
... perform much worse for both currency and banking crises than do the better indicators of economic fundamentals. The noise-to-signal ratio is higher than one for both types of crises, suggesting a similar incidence of good signals and false alarms. Hence, not surprisingly, the marginal contribution t ...
IFI_Ch11
... – Hedge can reduce the variance of future cash flows and thus may increase the firm’s present value by reducing the discount rate – Firms should focus on the main business they are in and take activities to minimize risks arising from interest rates, exchange rates, and other market variables – Mana ...
... – Hedge can reduce the variance of future cash flows and thus may increase the firm’s present value by reducing the discount rate – Firms should focus on the main business they are in and take activities to minimize risks arising from interest rates, exchange rates, and other market variables – Mana ...
Currency Misalignments and Growth: A New Look using ∗ Sophie Béreau
... notable for China. Chinese authorities have been frequently accused of maintaining the value of the yuan against major currencies at a very low level to finance China’s spectacular growth. Among other things, such long-lasting misalignment would facilitate China’s exports and thus economic growth. A ...
... notable for China. Chinese authorities have been frequently accused of maintaining the value of the yuan against major currencies at a very low level to finance China’s spectacular growth. Among other things, such long-lasting misalignment would facilitate China’s exports and thus economic growth. A ...
EUROPEAN ECONOMIC INTEGRATION AND THE FRANC ZONE
... between France and her former colonies in Western and Central Africa. This co-operation was institutionalized after the colonies achieved independence in the 1960s. Originally, the FZ was a wider area which included parts of IndoChina and Northern Africa, but the area covered later shrank. The two p ...
... between France and her former colonies in Western and Central Africa. This co-operation was institutionalized after the colonies achieved independence in the 1960s. Originally, the FZ was a wider area which included parts of IndoChina and Northern Africa, but the area covered later shrank. The two p ...
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.