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... What are the basic principles underlying the design of optimal monetary policies among open and interdependent economies? From the recent policy and academic debate, it is far from obvious that monetary policy should have any ‘international’ dimension at all. In fact, there is little or no consensus ...
... What are the basic principles underlying the design of optimal monetary policies among open and interdependent economies? From the recent policy and academic debate, it is far from obvious that monetary policy should have any ‘international’ dimension at all. In fact, there is little or no consensus ...
Understanding the appreciation of the Australian dollar and its policy
... unusually high. In addition to holding policy interest rates at or near the zero lower bound, some central banks have also undertaken monetary expansion through quantitative easing, which also puts downward pressure on their currencies, thereby contributing to the high AUD. Secondly, a number of oth ...
... unusually high. In addition to holding policy interest rates at or near the zero lower bound, some central banks have also undertaken monetary expansion through quantitative easing, which also puts downward pressure on their currencies, thereby contributing to the high AUD. Secondly, a number of oth ...
Putting the Cart Before the Horse? Capital Account Liberalization and
... We argue that with existing capital controls in place—even if these are somewhat porous— the banking system is unlikely to be subject to substantial stress simply as a result of greater exchange rate flexibility. Domestic banks do not have a large net exposure to currency risk, and exchange rate fle ...
... We argue that with existing capital controls in place—even if these are somewhat porous— the banking system is unlikely to be subject to substantial stress simply as a result of greater exchange rate flexibility. Domestic banks do not have a large net exposure to currency risk, and exchange rate fle ...
NBER WORKING PAPER SERIES LIQUIDITY TRAPS: HOW TO AVOID THEM AND
... policy. The second is to lower the zero nominal interest rate floor. This second option involves paying negative interest on government 'bearer bonds' -- coin and currency, that is 'taxing money', as advocated by Gesell. This would also reduce the likelihood of ending up in a liquidity trap. Taxing ...
... policy. The second is to lower the zero nominal interest rate floor. This second option involves paying negative interest on government 'bearer bonds' -- coin and currency, that is 'taxing money', as advocated by Gesell. This would also reduce the likelihood of ending up in a liquidity trap. Taxing ...
Prasad-uce05-s 405386 en
... We argue that with existing capital controls in place—even if these are somewhat porous— the banking system is unlikely to be subject to substantial stress simply as a result of greater exchange rate flexibility. Domestic banks do not have a large net exposure to currency risk, and exchange rate fle ...
... We argue that with existing capital controls in place—even if these are somewhat porous— the banking system is unlikely to be subject to substantial stress simply as a result of greater exchange rate flexibility. Domestic banks do not have a large net exposure to currency risk, and exchange rate fle ...
analysis of factors affecting fluctuations in the
... The nominal exchange rate is the home-country currency price of a foreign currency. It measures the relative price of two countries’ currencies (in a given moment in the foreign exchange market). The real exchange rate can be defined as the rate at which two countries’ goods trade against each (Rein ...
... The nominal exchange rate is the home-country currency price of a foreign currency. It measures the relative price of two countries’ currencies (in a given moment in the foreign exchange market). The real exchange rate can be defined as the rate at which two countries’ goods trade against each (Rein ...
The IMF Classification of Official Exchange Rate Regimes
... the local currency in combination with debt obligations in foreign currency. The second case for common currencies has two stands: macroeconomic and microeconomic. The macroeconomic argument is that a common currency can provide member countries with an anchor against inflation, and is particularly ...
... the local currency in combination with debt obligations in foreign currency. The second case for common currencies has two stands: macroeconomic and microeconomic. The macroeconomic argument is that a common currency can provide member countries with an anchor against inflation, and is particularly ...
S024285_en.pdf
... of markets, the features of expectations-formation processes and the characteristics of price-setting practices are likely to vary between economies. This observation would lead to arguments stressing that there is no single monetary or exchange rate system that would be right for all countries at a ...
... of markets, the features of expectations-formation processes and the characteristics of price-setting practices are likely to vary between economies. This observation would lead to arguments stressing that there is no single monetary or exchange rate system that would be right for all countries at a ...
The De Facto Exchange Rate Regimes in East Asia over 2003
... different from what governments had alleged. In their famous paper of 2002, Calvo and Reinhart illustrated that many de jure floating exchange rates in emerging and developing economies exhibited limited flexibility using data over 1970-1999, proposing the renowned ‘fear of floating’ phenomenon. Sim ...
... different from what governments had alleged. In their famous paper of 2002, Calvo and Reinhart illustrated that many de jure floating exchange rates in emerging and developing economies exhibited limited flexibility using data over 1970-1999, proposing the renowned ‘fear of floating’ phenomenon. Sim ...
Regulation Setting, Calculating and Maintaining Overall Open
... d) Currency Swap - two foreign exchange deals between two participants, made in the same currency and at one and the same time (during the course of one business day), but with different delivery dates and different exchange trade rates; e) Currency Option - the right to trade foreign currency, gran ...
... d) Currency Swap - two foreign exchange deals between two participants, made in the same currency and at one and the same time (during the course of one business day), but with different delivery dates and different exchange trade rates; e) Currency Option - the right to trade foreign currency, gran ...
Joining the European Monetary Union
... common efforts by EU governments; but many unresolved and under‐researched questions remain open. These issues require detailed and continuous analysis and obtaining new results and estimates, which end in conflict with previous ones. This is made possible thanks to the growing number ...
... common efforts by EU governments; but many unresolved and under‐researched questions remain open. These issues require detailed and continuous analysis and obtaining new results and estimates, which end in conflict with previous ones. This is made possible thanks to the growing number ...
euro area and member states
... make changes to national laws and rules, notably governing its national central bank and other monetary issues, in order to make them compatible with the Treaty. In particular, national central banks must be independent, such that the monetary policy decided by the European Central Bank is also inde ...
... make changes to national laws and rules, notably governing its national central bank and other monetary issues, in order to make them compatible with the Treaty. In particular, national central banks must be independent, such that the monetary policy decided by the European Central Bank is also inde ...
forward rate
... country’s real effective exchange rate index can deviate from it’s PPP equilibrium point – The degree to which the prices of imported & exported goods change as a result of exchange rate changes is termed pass-through – Example: assume BMW produces a car in Germany and all costs are incurred in euro ...
... country’s real effective exchange rate index can deviate from it’s PPP equilibrium point – The degree to which the prices of imported & exported goods change as a result of exchange rate changes is termed pass-through – Example: assume BMW produces a car in Germany and all costs are incurred in euro ...
MACROECONOMIC POLiCiES AND EXCHANGE RATES
... extremely difficult t o capture, yet they can often outweigh the influence of other exchange-rate determinants. For example, there is widespread agreement at the theoretical level that, other things being given, more rapid monetary growth will tend to weaken the nominal exchange rate. Yet on some oc ...
... extremely difficult t o capture, yet they can often outweigh the influence of other exchange-rate determinants. For example, there is widespread agreement at the theoretical level that, other things being given, more rapid monetary growth will tend to weaken the nominal exchange rate. Yet on some oc ...
Fiscal Devaluations No. 12-10 Emmanuel Farhi, Gita Gopinath, and Oleg Itskhoki
... import tariff and an export subsidy, or through an increase in the value-added tax (VAT) which is reimbursed to exporters and levied on importers. Additionally, to ensure that producer prices at home remain the same as under a nominal devaluation, an increase in the VAT needs to be offset with a re ...
... import tariff and an export subsidy, or through an increase in the value-added tax (VAT) which is reimbursed to exporters and levied on importers. Additionally, to ensure that producer prices at home remain the same as under a nominal devaluation, an increase in the VAT needs to be offset with a re ...
Leading Indicators of Currency Crises
... authorities to abandon the parity. More recently, however, some papers have argued that the authorities may decide to abandon the parity for reasons other than a depletion of official international reserves. Instead, they may be concerned about the adverse consequences of policies needed to maintain ...
... authorities to abandon the parity. More recently, however, some papers have argued that the authorities may decide to abandon the parity for reasons other than a depletion of official international reserves. Instead, they may be concerned about the adverse consequences of policies needed to maintain ...
Exchange Rate Movement of Developing Countries
... tries to guess what on the average other foreign exchange traders are thinking about the future exchange rate of a particular currency. If he expects that others on average are having an expectation of appreciation, he would tend to buy that currency to make capital gains. When most of the other pr ...
... tries to guess what on the average other foreign exchange traders are thinking about the future exchange rate of a particular currency. If he expects that others on average are having an expectation of appreciation, he would tend to buy that currency to make capital gains. When most of the other pr ...
ch21_5e
... Under flexible exchange rates, a country that needed to achieve a real depreciation could do so by relying on an expansionary monetary policy to achieve both lower interest and a decrease in the exchange rate. Under fixed exchange rates, the fixed exchange rate and the interest parity condition ...
... Under flexible exchange rates, a country that needed to achieve a real depreciation could do so by relying on an expansionary monetary policy to achieve both lower interest and a decrease in the exchange rate. Under fixed exchange rates, the fixed exchange rate and the interest parity condition ...
Spillover Notes, Issue 2: Spillovers from Dollar Appreciation
... the past three episodes; in comparison, the USD has appreciated so far by some 12 percent in real effective terms in the current episode. These episodes of strong and sustained USD appreciation were associated with a heightened number of external crises in EM economies (although less so in the Globa ...
... the past three episodes; in comparison, the USD has appreciated so far by some 12 percent in real effective terms in the current episode. These episodes of strong and sustained USD appreciation were associated with a heightened number of external crises in EM economies (although less so in the Globa ...
laura a. wolff - Pearson Higher Education
... 19. The requirement that borrowing nations change their policies so that the economic crisis cannot recur as a condition of taking a loan __________________ 20. The right of nations to pursue domestic policies that they perceive to be in their national interest and to be free from the intervention o ...
... 19. The requirement that borrowing nations change their policies so that the economic crisis cannot recur as a condition of taking a loan __________________ 20. The right of nations to pursue domestic policies that they perceive to be in their national interest and to be free from the intervention o ...
The International Financial System: Crises and Reforms
... soon after the devaluation, assumed that the external deficit would decline from 8 percent of GDP to 4 percent, and that growth would be 1.5 percent, these results to be obtained by the devaluation supported by a tightening of fiscal policy. When it became clear that the markets were in no mood to s ...
... soon after the devaluation, assumed that the external deficit would decline from 8 percent of GDP to 4 percent, and that growth would be 1.5 percent, these results to be obtained by the devaluation supported by a tightening of fiscal policy. When it became clear that the markets were in no mood to s ...
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.