Sterilization of Capital Inflows and Balance of Payments
... to have diminished more recently (Montiel and Reinhart, 1997 and 1999), they continue to be highly relevant to the determination of their “timing and magnitude” (Montiel and Reinhart, 1997)1, and sudden capital flow reversals due to contagion from other regional emerging markets have become more co ...
... to have diminished more recently (Montiel and Reinhart, 1997 and 1999), they continue to be highly relevant to the determination of their “timing and magnitude” (Montiel and Reinhart, 1997)1, and sudden capital flow reversals due to contagion from other regional emerging markets have become more co ...
An optimum-currency
... the criteria among countries in the real world established the case for separate currencies and flexible exchange rates among those currencies. In this regard, Friedman’s view was similar to that of Mundell. Second, we argue that, although the triad of papers by Mundell, McKinnon and Kenen contained ...
... the criteria among countries in the real world established the case for separate currencies and flexible exchange rates among those currencies. In this regard, Friedman’s view was similar to that of Mundell. Second, we argue that, although the triad of papers by Mundell, McKinnon and Kenen contained ...
Emerging market currency composition of reserves
... $7.7 trillion. There is now a debate regarding whether 2014 may prove to have been the time of “peak reserves”, to be followed by an extended draw-down of reserves as countries, including China, resist currency depreciation against a rising dollar (Winkler et al (2015)). In a world in which portfoli ...
... $7.7 trillion. There is now a debate regarding whether 2014 may prove to have been the time of “peak reserves”, to be followed by an extended draw-down of reserves as countries, including China, resist currency depreciation against a rising dollar (Winkler et al (2015)). In a world in which portfoli ...
NBER WORKING PAPER SERIES DOLLARIZATION, INFLATION AND GROWTH Sebastian Edwards I. Igal Magendzo
... The recurrence of currency crises in emerging countries has generated an intense debate on exchange rate policies. Pegged-but-adjustable exchange rate regimes have rapidly lost adepts, while hard pegs and freely floating rates have gained in popularity (See Summers 2000 and Fischer, 2001). A growing ...
... The recurrence of currency crises in emerging countries has generated an intense debate on exchange rate policies. Pegged-but-adjustable exchange rate regimes have rapidly lost adepts, while hard pegs and freely floating rates have gained in popularity (See Summers 2000 and Fischer, 2001). A growing ...
How Can Commodity Producers Make Fiscal & Monetary Policy
... PEPI, for Peg the Export Price Index • Some have responded to the PEP proposal by pointing out a side-effect of stabilizing the local-currency price of the export commodity: destabilizing the local price of other export goods. • For most countries, no commodity is more than half of exports. • Moreov ...
... PEPI, for Peg the Export Price Index • Some have responded to the PEP proposal by pointing out a side-effect of stabilizing the local-currency price of the export commodity: destabilizing the local price of other export goods. • For most countries, no commodity is more than half of exports. • Moreov ...
mmi05 razin 225761 en
... realized state of the domestic economy fundamentals; and, second, he/she guesses the likelihood of the credit extension-withdrawal action that all the other foreign creditors are going to take, given the signals they receive. A rational-expectations equilibrium of this global game is the set of self ...
... realized state of the domestic economy fundamentals; and, second, he/she guesses the likelihood of the credit extension-withdrawal action that all the other foreign creditors are going to take, given the signals they receive. A rational-expectations equilibrium of this global game is the set of self ...
Macroeconomics Chamberlin and Yueh
... around the world. • The process by which shocks can be transmitted across countries is known as contagion. • One solution would be to reimpose capital controls, but this would also make the advantages of international financial markets unattainable. • Therefore, policy makers have become increasingl ...
... around the world. • The process by which shocks can be transmitted across countries is known as contagion. • One solution would be to reimpose capital controls, but this would also make the advantages of international financial markets unattainable. • Therefore, policy makers have become increasingl ...
Impact of Real Depreciation of Taka on Export Earning of Bangladesh:
... series are cointegrated. For granger causality test it is important to know whether the variables are cointegrated or not as Engle and Granger (1987) pointed out that when a set of variables is cointegrated, a vector autoregression in first differences will be misspecified. The first differencing of ...
... series are cointegrated. For granger causality test it is important to know whether the variables are cointegrated or not as Engle and Granger (1987) pointed out that when a set of variables is cointegrated, a vector autoregression in first differences will be misspecified. The first differencing of ...
Dubravko Radosevic PEAC Final version Brussels
... preventing external debt accumulation. Because, decentralized decision-making could lead to excessive foreign borrowing from the national economy point of view. This is relevant only once debt ratios and current account deficits exceed certain levels and particularly when increased borrowing is for ...
... preventing external debt accumulation. Because, decentralized decision-making could lead to excessive foreign borrowing from the national economy point of view. This is relevant only once debt ratios and current account deficits exceed certain levels and particularly when increased borrowing is for ...
Exchange rate volatility and economic performance in Peru: A firm
... large contraction in economic activity and the collapse of the financial sector. The most striking characteristics of these currency crises were that, previous to the crises themselves, the degree of exchange rate misalignment was considered small, and the macroeconomic fundamentals were considered ...
... large contraction in economic activity and the collapse of the financial sector. The most striking characteristics of these currency crises were that, previous to the crises themselves, the degree of exchange rate misalignment was considered small, and the macroeconomic fundamentals were considered ...
“New” Views on the Optimum Currency Area Theory: What
... stable. This will in turn foster more equilibrated current account transactions and trade, and reduce the need for exchange rate adjustments. On the other hand, not all inflation differentials are necessarily problematic. Some “catching up” process by less developed countries could lead to “Balassa- ...
... stable. This will in turn foster more equilibrated current account transactions and trade, and reduce the need for exchange rate adjustments. On the other hand, not all inflation differentials are necessarily problematic. Some “catching up” process by less developed countries could lead to “Balassa- ...
Exchange Rate Regimes in East Asia – Recent Trends
... The monetary authorities of East Asian countries learnt a lesson that it is inadequate for a country with close economic relationships not only with the United States but also other countries to adopt either an official or de facto dollar-peg system from the experience of the Asian currency crisis i ...
... The monetary authorities of East Asian countries learnt a lesson that it is inadequate for a country with close economic relationships not only with the United States but also other countries to adopt either an official or de facto dollar-peg system from the experience of the Asian currency crisis i ...
Two Economic Crisis and Dollarization for Cambodia, Laos, and
... Along with this phenomenon, Cambodia, Laos, and Vietnam have been noticeably affected by dollarization from the onset of its economic reform process.3) In particular, the prevalent use of the dollar has been noticed in Cambodia and Laos. The U.S. dollar is held in the form of cash in circulation and ...
... Along with this phenomenon, Cambodia, Laos, and Vietnam have been noticeably affected by dollarization from the onset of its economic reform process.3) In particular, the prevalent use of the dollar has been noticed in Cambodia and Laos. The U.S. dollar is held in the form of cash in circulation and ...
July 2016
... flexibility of policies that support China’s leverage transfer, help to discover the balanced RMB exchange rates and promote the process of RMB internationalisation. Promoting the diversification of the investor structure would help improve the efficiency of discovering the market equilibrium price ...
... flexibility of policies that support China’s leverage transfer, help to discover the balanced RMB exchange rates and promote the process of RMB internationalisation. Promoting the diversification of the investor structure would help improve the efficiency of discovering the market equilibrium price ...
single central bank: macroeconomic costs and benefits for the
... However, establishing such an institution entails a number of economic and political incidences on the region and deserves careful examination. Establishing a monetary union entails giving up monetary autonomy which, in turn, means the loss of a policy instrument to stabilize national economic shock ...
... However, establishing such an institution entails a number of economic and political incidences on the region and deserves careful examination. Establishing a monetary union entails giving up monetary autonomy which, in turn, means the loss of a policy instrument to stabilize national economic shock ...
NBER WORKING PAPER SERIES G7 CURRENT ACCOUNT IMBALANCES: SUSTAINABILITY AND ADJUSTMENT
... in goods and services and the volume of two way trade in financial assets is the backbone of a successful industrialization and development strategy. If the price to be paid for this strategy includes financing a large US current account deficit governments in the periphery will see it in their inte ...
... in goods and services and the volume of two way trade in financial assets is the backbone of a successful industrialization and development strategy. If the price to be paid for this strategy includes financing a large US current account deficit governments in the periphery will see it in their inte ...
Exchange rate or inflation targeting in monetary policy?
... probable that the impact of such costs can be reduced by enhanced methods for minimizing currency risks.3 Secondly, a fixed exchange rate can serve as the anchor of monetary policy and increase its transparency. It can also serve as a suitable mechanism for bringing down inflation, as has been the c ...
... probable that the impact of such costs can be reduced by enhanced methods for minimizing currency risks.3 Secondly, a fixed exchange rate can serve as the anchor of monetary policy and increase its transparency. It can also serve as a suitable mechanism for bringing down inflation, as has been the c ...
CURRENCY COMPETITION BETWEEN EURO AND US DOLLAR Li
... Top currencies - the most esteemed of international currencies - dominate most if not all types of cross-boarder activities and their popularity is more or less universal, and there use is not limited to any geographic region. Patrician currencies, which are used for various cross-border purposes, w ...
... Top currencies - the most esteemed of international currencies - dominate most if not all types of cross-boarder activities and their popularity is more or less universal, and there use is not limited to any geographic region. Patrician currencies, which are used for various cross-border purposes, w ...
NBER WORKING PAPER SERIES MONETARY POLICY AND THE DOLLAR Peter L. Rousseau
... time, especially in light of restrictive policies imposed by the mother country. It was only when the supply of paper money increased to great excess that bouts of hyperinflation and depreciation would destroy wealth and lead to public consternation. Because these events were relatively rare, it is ...
... time, especially in light of restrictive policies imposed by the mother country. It was only when the supply of paper money increased to great excess that bouts of hyperinflation and depreciation would destroy wealth and lead to public consternation. Because these events were relatively rare, it is ...
Glossary of key terms in international economics
... of the U.S. federal, state, and local governments to purchase American products unless comparable foreign goods are substantially cheaper. ...
... of the U.S. federal, state, and local governments to purchase American products unless comparable foreign goods are substantially cheaper. ...
Exchange rate strategies for small open developed Economics Department, RBNZ
... markets, has led to a rethinking about exchange rate arrangements, in two general directions. First, a consensus has emerged about the “impossible trinity” of a fixed exchange rate, capital mobility, and a monetary policy dedicated to inconsistent domestic goals, which in turn has led several countr ...
... markets, has led to a rethinking about exchange rate arrangements, in two general directions. First, a consensus has emerged about the “impossible trinity” of a fixed exchange rate, capital mobility, and a monetary policy dedicated to inconsistent domestic goals, which in turn has led several countr ...
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.