Chap_19
... grew, their need for official international reserves to maintain fixed exchange rates grew as well. • But this rate of growth was faster than the growth rate of the gold reserves that central banks held. – Supply of gold from new discoveries was growing slowly. – Holding dollar-denominated assets wa ...
... grew, their need for official international reserves to maintain fixed exchange rates grew as well. • But this rate of growth was faster than the growth rate of the gold reserves that central banks held. – Supply of gold from new discoveries was growing slowly. – Holding dollar-denominated assets wa ...
Lecture Slides on Chapter 19 of Krugman, et. al.
... grew, their need for official international reserves to maintain fixed exchange rates grew as well. • But this rate of growth was faster than the growth rate of the gold reserves that central banks held. – Supply of gold from new discoveries was growing slowly. – Holding dollar-denominated assets wa ...
... grew, their need for official international reserves to maintain fixed exchange rates grew as well. • But this rate of growth was faster than the growth rate of the gold reserves that central banks held. – Supply of gold from new discoveries was growing slowly. – Holding dollar-denominated assets wa ...
e ≡ exchange rate
... the price of a good should be the same throughout the world (assuming transportation costs and trade barriers are low) e.g., if steel costs $100/ton in America and €50/ton in Europe, then the exchange rate should be e = 2 $/€ ...
... the price of a good should be the same throughout the world (assuming transportation costs and trade barriers are low) e.g., if steel costs $100/ton in America and €50/ton in Europe, then the exchange rate should be e = 2 $/€ ...
foreign exchange risk
... transaction exposure translation exposure Foreign currency fluctuations are one of the key sources of risk in multinational operations. Consider the case of Dell Inc., which operates assembly plants for its computers within the United States as well as in Ireland, Malaysia, China, and Brazil; runs o ...
... transaction exposure translation exposure Foreign currency fluctuations are one of the key sources of risk in multinational operations. Consider the case of Dell Inc., which operates assembly plants for its computers within the United States as well as in Ireland, Malaysia, China, and Brazil; runs o ...
Does exchange rate depreciation have contractionary effects on firm
... of view, the exchange rate balance-sheet effect is best described in the work of Céspedes et al (2004, p 1183), who point out that: “… In conventional textbook accounts, expansionary monetary policy and depreciation of the currency are optimal in response to an adverse foreign shock… But if an econo ...
... of view, the exchange rate balance-sheet effect is best described in the work of Céspedes et al (2004, p 1183), who point out that: “… In conventional textbook accounts, expansionary monetary policy and depreciation of the currency are optimal in response to an adverse foreign shock… But if an econo ...
china`s foreign exchange black market and exchange flight
... the government does not provide the needed foreign currency, they must resort to the black market. Also expectation of inflation and negative real interest rates lure people to switch renminbi to foreign currencies to preserve their wealth. Enterprises. Private and state enterprises resort to the fo ...
... the government does not provide the needed foreign currency, they must resort to the black market. Also expectation of inflation and negative real interest rates lure people to switch renminbi to foreign currencies to preserve their wealth. Enterprises. Private and state enterprises resort to the fo ...
UIP and the Exchange Rate
... - Instead a real depreciation of the dollar (in terms of the euro) improves the trade balance and the current account (US goods become cheaper) – As the real rate goes down (depreciation of the $) net exports up, trade balance and current account improves – Net exports curve negatively sloped with r ...
... - Instead a real depreciation of the dollar (in terms of the euro) improves the trade balance and the current account (US goods become cheaper) – As the real rate goes down (depreciation of the $) net exports up, trade balance and current account improves – Net exports curve negatively sloped with r ...
costs and benefits of running an international currency
... The empirical literature has also tried to identify the underlying factors that give rise to an international usage of a currency (e.g., Eichengreen and Mathieson, 2001; Dooley et al., 1989; Chinn and Frankel, 2008). The literature has identified the following key factors. First is economic strength ...
... The empirical literature has also tried to identify the underlying factors that give rise to an international usage of a currency (e.g., Eichengreen and Mathieson, 2001; Dooley et al., 1989; Chinn and Frankel, 2008). The literature has identified the following key factors. First is economic strength ...
The Global Flow of Funds: Chapter 2
... goods and services, while the capital account documents trade in financial assets. A country's accounts must balance, meaning that any deficit in the current account must be offset by a surplus in the capital account. Thus by definition, a country with a current account deficit consumes more than it ...
... goods and services, while the capital account documents trade in financial assets. A country's accounts must balance, meaning that any deficit in the current account must be offset by a surplus in the capital account. Thus by definition, a country with a current account deficit consumes more than it ...
Removal of exchange control by the Thatcher Government
... liberalisation is often cited as an example of such a gap.17 My analysis suggests that this might be because her influence on the issue was more limited than previously thought. The background to the abolition of exchange controls There were three background factors which made it possible for the Th ...
... liberalisation is often cited as an example of such a gap.17 My analysis suggests that this might be because her influence on the issue was more limited than previously thought. The background to the abolition of exchange controls There were three background factors which made it possible for the Th ...
IOSR Journal Of Humanities And Social Science (IOSR-JHSS)
... 1980s, it was until 1986 that a comprehensive economic adjustment programme was put in place to restructure the economy. Exchange rate reform was a major component of this economic reform agenda that was further intensified under the Nigerian Economic Empowerment and Development Strategy (NEEDS). Th ...
... 1980s, it was until 1986 that a comprehensive economic adjustment programme was put in place to restructure the economy. Exchange rate reform was a major component of this economic reform agenda that was further intensified under the Nigerian Economic Empowerment and Development Strategy (NEEDS). Th ...
W o r k
... instance, real exchange rates have been much more variable under the current managed float than they were under the Bretton Woods system.1 There is also overwhelming evidence that, since 1973, large swings in nominal and real exchange rates have been closely correlated while ratios of price indices ...
... instance, real exchange rates have been much more variable under the current managed float than they were under the Bretton Woods system.1 There is also overwhelming evidence that, since 1973, large swings in nominal and real exchange rates have been closely correlated while ratios of price indices ...
This PDF is a selection from an out-of-print volume from... Bureau of Economic Research Volume Title: Exchange Rates and International Macroeconomics
... is not enough justification for generalizing it, unless one feels that the theory leads to implications that are bluntly invalidated by the facts, or are potentially so significant for policy purposes that a search for robustness is warranted. Our motivation for extending the Dornbusch-Wilson assump ...
... is not enough justification for generalizing it, unless one feels that the theory leads to implications that are bluntly invalidated by the facts, or are potentially so significant for policy purposes that a search for robustness is warranted. Our motivation for extending the Dornbusch-Wilson assump ...
Exchange Rates
... • Nominal exchange rates – In the past, many currencies operated under a fixed-exchange-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 • ...
... • Nominal exchange rates – In the past, many currencies operated under a fixed-exchange-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 • ...
Setting the Stage for a National Currency in the West
... recent years, nominal wages have been virtually constant. Since inflation has been very low in Gaza, real wages have changed very little.9 This is not the case in the West Bank, where average wages are higher than in Gaza. In the West Bank, while nominal wages have also remained fairly stable, real ...
... recent years, nominal wages have been virtually constant. Since inflation has been very low in Gaza, real wages have changed very little.9 This is not the case in the West Bank, where average wages are higher than in Gaza. In the West Bank, while nominal wages have also remained fairly stable, real ...
1 - unece
... World Bank, OECD), the US Treasury, etc., many emerging economies embraced this trend and gradually removed restrictions on international capital flows like taxes, administrative restrictions and prohibitions either on transfer of funds or the exchange rate. Two factors have contributed to the growi ...
... World Bank, OECD), the US Treasury, etc., many emerging economies embraced this trend and gradually removed restrictions on international capital flows like taxes, administrative restrictions and prohibitions either on transfer of funds or the exchange rate. Two factors have contributed to the growi ...
Maurice Obstfeld Paper No. i186 1050 PAPER SERIES
... in those papers (and in the earlier literature), speculative attacks on the currency occur in a setting where the eventual abandonment of the current ...
... in those papers (and in the earlier literature), speculative attacks on the currency occur in a setting where the eventual abandonment of the current ...
Interim Report of the Commission of Enquiry_0
... market is to facilitate international trade and international money and capital movements by providing a market where different currencies can be exchange d for one another. In the South African forex market there are mainly two types of participants: banks authorised by the Reserve Bank to deal in ...
... market is to facilitate international trade and international money and capital movements by providing a market where different currencies can be exchange d for one another. In the South African forex market there are mainly two types of participants: banks authorised by the Reserve Bank to deal in ...
Download Dissertation
... but they even tend to appreciate although this has been argued not to be the case at longer horizons by Chinn and Meredith (2004). Important papers in the early literature also include Hansen and Hodrick (1980) and Fama (1984). Hodrick (1987) offers a good review of this early literature on the UIRP ...
... but they even tend to appreciate although this has been argued not to be the case at longer horizons by Chinn and Meredith (2004). Important papers in the early literature also include Hansen and Hodrick (1980) and Fama (1984). Hodrick (1987) offers a good review of this early literature on the UIRP ...
PDF Download
... monetary union, there is a single currency and a single monetary policy, but the two countries are free to follow independent or national …scal policies. We follow a feedback policy rule type approach to (monetary and …scal) policy. We solve this model numerically. Fiscal policies are set as in the ...
... monetary union, there is a single currency and a single monetary policy, but the two countries are free to follow independent or national …scal policies. We follow a feedback policy rule type approach to (monetary and …scal) policy. We solve this model numerically. Fiscal policies are set as in the ...
Dollarization: The Case of Zimbabwe
... The current finance minister, Tendai Biti, noted that “high inflation was primarily driven by high money supply growth on account of expansionary quasi-fiscal activities by the Central Bank. This pro-inflationary macroeconomic policy was compounded by speculative activities in financial markets and ...
... The current finance minister, Tendai Biti, noted that “high inflation was primarily driven by high money supply growth on account of expansionary quasi-fiscal activities by the Central Bank. This pro-inflationary macroeconomic policy was compounded by speculative activities in financial markets and ...
Argentina`s Monetary and Exchange Rate Policies after the
... validated contracts in foreign currencies. It also stipulated that the central bank must back 100 percent of its monetary base with foreign reserves. By September 1992, the new Central Bank Law set narrow margins to the possibilities of purchasing public bonds and lending to the commercial banks. Th ...
... validated contracts in foreign currencies. It also stipulated that the central bank must back 100 percent of its monetary base with foreign reserves. By September 1992, the new Central Bank Law set narrow margins to the possibilities of purchasing public bonds and lending to the commercial banks. Th ...
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.