The Sterling Devaluation of 1967, the International
... September and the end of November, its obligations under this heading increased by £699m.22 By mid-October, the government was running out of options. Alec Cairncross, Head of the Government Economic Service, had several weeks earlier come to the conclusion that the gold and foreign exchange reserve ...
... September and the end of November, its obligations under this heading increased by £699m.22 By mid-October, the government was running out of options. Alec Cairncross, Head of the Government Economic Service, had several weeks earlier come to the conclusion that the gold and foreign exchange reserve ...
International Economics, 10e (Krugman/Obstfeld/Melitz) Chapter 19
... savings may be easier to tax than those on assets abroad; second, an addition to the home capital stock may reduce domestic unemployment and therefore lead to higher national income; third, domestic investment by one firm may have beneficial technological spillover effects on other domestic producer ...
... savings may be easier to tax than those on assets abroad; second, an addition to the home capital stock may reduce domestic unemployment and therefore lead to higher national income; third, domestic investment by one firm may have beneficial technological spillover effects on other domestic producer ...
The Macroeconomics Of The Unofficial Foreign Exchange Market In
... the coffeeboom collapsed; the current account deficit rose to above 15 percent of GDP in 1978 and gross reserves fell by nearly $200million over the course of the year. External arrears appeared for the first time in 1978. The parallel premium fluctuated dramatically over the 1974 to 1978 period, ri ...
... the coffeeboom collapsed; the current account deficit rose to above 15 percent of GDP in 1978 and gross reserves fell by nearly $200million over the course of the year. External arrears appeared for the first time in 1978. The parallel premium fluctuated dramatically over the 1974 to 1978 period, ri ...
Exchange rate and monetary policy for Kazakhstan in light of
... and others who set wages and prices then perceive that inflation will be low in the future because the currency peg will prevent the central bank from expanding even if it wanted to. When workers and firm managers have low expectations of inflation, they set their wages and prices accordingly. The r ...
... and others who set wages and prices then perceive that inflation will be low in the future because the currency peg will prevent the central bank from expanding even if it wanted to. When workers and firm managers have low expectations of inflation, they set their wages and prices accordingly. The r ...
A Model of the Twin Ds: Optimal Default and Devaluation ∗ S. Na
... incentives, economies whose currencies are pegged can support significantly less external debt than economies in which the exchange rate floats optimally. The present paper is related to several strands of literature. An important body of work focuses on the fiscal consequences of devaluations, emph ...
... incentives, economies whose currencies are pegged can support significantly less external debt than economies in which the exchange rate floats optimally. The present paper is related to several strands of literature. An important body of work focuses on the fiscal consequences of devaluations, emph ...
Banking and Currency Crises: How Common Are Twins?
... The potential for a bank run is not directly observable and, once either a bank run or large-scale government intervention has occurred, the situation most likely will have been preceded by a protracted deterioration in the quality of assets held by banks. Identifying banking sector distress by the ...
... The potential for a bank run is not directly observable and, once either a bank run or large-scale government intervention has occurred, the situation most likely will have been preceded by a protracted deterioration in the quality of assets held by banks. Identifying banking sector distress by the ...
Explaining large euro effects on trade: the extensive margin and
... Euro effects seem to be present for exports within the eurozone and from the eurozone to outsiders, but not for exports from outsiders to the eurozone. Naturally, we need to control for other factors that affect trade to be able to determine if euro effects are really present and how large they are. ...
... Euro effects seem to be present for exports within the eurozone and from the eurozone to outsiders, but not for exports from outsiders to the eurozone. Naturally, we need to control for other factors that affect trade to be able to determine if euro effects are really present and how large they are. ...
Rethinking the Role of NCBs in the EMU
... trade generates an excess supply of domestic goods, which is denoted by -Xe. In addition, the rise in the price level reduces the real value of nominal wealth, whose value is held fixed at one. This too creates an excess supply in the domestic goods market, and in the amount -Xw. These two effects r ...
... trade generates an excess supply of domestic goods, which is denoted by -Xe. In addition, the rise in the price level reduces the real value of nominal wealth, whose value is held fixed at one. This too creates an excess supply in the domestic goods market, and in the amount -Xw. These two effects r ...
foreign exchange rate regimes and foreign exchange markets in
... increases the foreign exchange risk, and also demands the development of adequate foreign exchange transactions and instruments which serve to cover exchange risk. Fixed rates reduce the foreign exchange exposure and risk. They are connected with the preference for stability and certainty. On the ot ...
... increases the foreign exchange risk, and also demands the development of adequate foreign exchange transactions and instruments which serve to cover exchange risk. Fixed rates reduce the foreign exchange exposure and risk. They are connected with the preference for stability and certainty. On the ot ...
krugman_PPT_c22
... balance of payment crisis may result with a debt crisis. Official international reserves may quickly be depleted because governments and private institutions need to pay for their debts with foreign funds, forcing the central bank to abandon the fixed exchange rate. ...
... balance of payment crisis may result with a debt crisis. Official international reserves may quickly be depleted because governments and private institutions need to pay for their debts with foreign funds, forcing the central bank to abandon the fixed exchange rate. ...
NBER WORKING PAPER SERIES CURRENCY MISALIGNMENTS AND OPTIMAL MONETARY POLICY: A REEXAMINATION
... Exchange rates among the large economies have fluctuated dramatically over the past 30 years. The dollar/euro exchange rate has experienced swings of greater than 60%, and even the Canadian dollar/U.S. dollar has risen and fallen by more than 35% in the past decade, but inflation rates in these cou ...
... Exchange rates among the large economies have fluctuated dramatically over the past 30 years. The dollar/euro exchange rate has experienced swings of greater than 60%, and even the Canadian dollar/U.S. dollar has risen and fallen by more than 35% in the past decade, but inflation rates in these cou ...
View/Open - Hasanuddin University
... The study aims to determine factors which influence the export volume of leading commodities in South Sulawesi and investigate which hedging strategy has been implemented by the exporters. The survey was undertaken for 13 managers arranging 250 sales contracts in thirteen companies. They were asked ...
... The study aims to determine factors which influence the export volume of leading commodities in South Sulawesi and investigate which hedging strategy has been implemented by the exporters. The survey was undertaken for 13 managers arranging 250 sales contracts in thirteen companies. They were asked ...
Exchange Rates, Balance of Payments, and International Debt
... 4. Continuing the yap example, what might the yap government be forced to do if it did not have a sufficient quantity of yaps on reserve to eliminate the excess demand? • The yap government might be forced to borrow yaps from another country, or even agree to increase the exchange rate ($ per yap). ...
... 4. Continuing the yap example, what might the yap government be forced to do if it did not have a sufficient quantity of yaps on reserve to eliminate the excess demand? • The yap government might be forced to borrow yaps from another country, or even agree to increase the exchange rate ($ per yap). ...
anchoring to the euro (and grouped together)? the case of african
... may be seen as a cost. However, for the case of small open economies, which typically have low product diversification, the exchange rate is an instrument with weak effectiveness due to the high pass-through from import prices to domestic prices. (ii) ...
... may be seen as a cost. However, for the case of small open economies, which typically have low product diversification, the exchange rate is an instrument with weak effectiveness due to the high pass-through from import prices to domestic prices. (ii) ...
NBER WORKING PAPER SERIES THE ECONOMY OF ISRAEL Stanley Fischer
... domestic deficit. Nonetheless, the increase in the money base accounts for the financing of a significant component of government spending-— about 2.5% of GNP.1 2 Even though the monetary base in 1931 was under 3.5% of GNP, large amounts of ...
... domestic deficit. Nonetheless, the increase in the money base accounts for the financing of a significant component of government spending-— about 2.5% of GNP.1 2 Even though the monetary base in 1931 was under 3.5% of GNP, large amounts of ...
Prospective Interest Rate Differential and Currency Returns
... expected to depreciate by the interest rate differential between the foreign and domestic risk free rates. Numerous empirical studies strongly reject the UIP (Fama (1984), Hodrick and Srivastava (1984)) and find that the expected depreciation rate of a high interest rate currency is at best weakly r ...
... expected to depreciate by the interest rate differential between the foreign and domestic risk free rates. Numerous empirical studies strongly reject the UIP (Fama (1984), Hodrick and Srivastava (1984)) and find that the expected depreciation rate of a high interest rate currency is at best weakly r ...
Essay Questions
... foreign products. Due to this, exports increase as foreigners demand more domestic exports. The change in imports is ambiguous because fewer units of imports are purchased (the volume effect), but each foreign unit is now more expensive (the value effect). Remember: exports and imports are measured ...
... foreign products. Due to this, exports increase as foreigners demand more domestic exports. The change in imports is ambiguous because fewer units of imports are purchased (the volume effect), but each foreign unit is now more expensive (the value effect). Remember: exports and imports are measured ...
This PDF is a selection from an out-of-print volume from... Bureau of Economic Research Volume Title: Inflation: Causes and Effects
... power parities can be expected to hold in the long run only if most of the shocks to the system are of a monetary origin and do not require changes in relative prices. To the extent that most of the shocks reflect "real" changes (like differential growth rates among sectors), the required changes in ...
... power parities can be expected to hold in the long run only if most of the shocks to the system are of a monetary origin and do not require changes in relative prices. To the extent that most of the shocks reflect "real" changes (like differential growth rates among sectors), the required changes in ...
Openness in goods markets
... The capital account balance, also known as net capital flows can be positive (negative) if foreign holdings of U.S. assets are greater (less) than U.S. holdings of foreign assets, in which case there is a capital account surplus (deficit). The numbers for current and capital account transactions are ...
... The capital account balance, also known as net capital flows can be positive (negative) if foreign holdings of U.S. assets are greater (less) than U.S. holdings of foreign assets, in which case there is a capital account surplus (deficit). The numbers for current and capital account transactions are ...
Full Text
... Interestingly, evidence of dollarization hysteresis has been found most often in cases where estimates of dollar currency in circulation were used instead of, or in addition to, data on dollar denominated deposits. A seminal paper in this respect is Kamin and Ericsson (1993), who used data on record ...
... Interestingly, evidence of dollarization hysteresis has been found most often in cases where estimates of dollar currency in circulation were used instead of, or in addition to, data on dollar denominated deposits. A seminal paper in this respect is Kamin and Ericsson (1993), who used data on record ...
Exchange Rate Reform in South Sudan
... pushed the parallel exchange rate (in SSP per USD) increasingly far from the official rate. However, the story does not end here. For some time, the divergence between the official and parallel market rates was kept in check, especially once oil exports resumed, and to some extent the Bank of South ...
... pushed the parallel exchange rate (in SSP per USD) increasingly far from the official rate. However, the story does not end here. For some time, the divergence between the official and parallel market rates was kept in check, especially once oil exports resumed, and to some extent the Bank of South ...
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.