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 ...
algierslessprocyclical
... accumulate net foreign assets during temporary upturns. In practice, it does not always work this way. Capital flows are more often procyclical than countercyclical.2 Most theories to explain this involve imperfections in capital markets, such as asymmetric information or the need for collateral. In ...
... accumulate net foreign assets during temporary upturns. In practice, it does not always work this way. Capital flows are more often procyclical than countercyclical.2 Most theories to explain this involve imperfections in capital markets, such as asymmetric information or the need for collateral. In ...
Mankiw 6e PowerPoints
... Dec. 22: central bank’s reserves nearly gone. It abandons the fixed rate and lets e float. ...
... Dec. 22: central bank’s reserves nearly gone. It abandons the fixed rate and lets e float. ...
Mankiw 6e PowerPoints
... Dec. 22: central bank’s reserves nearly gone. It abandons the fixed rate and lets e float. ...
... Dec. 22: central bank’s reserves nearly gone. It abandons the fixed rate and lets e float. ...
This PDF is a selection from a published volume from... Bureau of Economic Research Volume Title: NBER International Seminar on Macroeconomics
... Davig and Leeper (2009), Erceg and Lindé (2010), Christiano et al. (2011), and Woodford (2011). The spillover effects to the North of the South’s fiscal contraction are negative and very sizable and cause a substantial deterioration in the North’s government budget position. The implication of large ...
... Davig and Leeper (2009), Erceg and Lindé (2010), Christiano et al. (2011), and Woodford (2011). The spillover effects to the North of the South’s fiscal contraction are negative and very sizable and cause a substantial deterioration in the North’s government budget position. The implication of large ...
ch09
... System Works • A fixed exchange rate is a commitment by a country to buy and sell its currency at fixed, unchanging prices (in terms of other currencies) – the central bank or Treasury must maintain foreign exchange reserves – these reserves are limited ...
... System Works • A fixed exchange rate is a commitment by a country to buy and sell its currency at fixed, unchanging prices (in terms of other currencies) – the central bank or Treasury must maintain foreign exchange reserves – these reserves are limited ...
Welfare Costs of Inflation and the Circulation of US Currency Abroad
... of the foreign claims (implied by the currency holdings abroad). SchmittGrohé and Uribe (2009) conclude that, under standard parameter calibrations and assuming that half of the US currency circulates abroad, the optimal policy involves deviations from the Friedman rule and the targeting of positive ...
... of the foreign claims (implied by the currency holdings abroad). SchmittGrohé and Uribe (2009) conclude that, under standard parameter calibrations and assuming that half of the US currency circulates abroad, the optimal policy involves deviations from the Friedman rule and the targeting of positive ...
The Effect of Exchange Rates on Statistical Decisions Author(s
... probability that the Bayesian can use in all decision problems without regard to how losses are paid. However, as considered in section 5, we give conditions under which the same decision will be made, regardless of which of several currencies is used for paying the loss. In this connection, in sect ...
... probability that the Bayesian can use in all decision problems without regard to how losses are paid. However, as considered in section 5, we give conditions under which the same decision will be made, regardless of which of several currencies is used for paying the loss. In this connection, in sect ...
NBER WORKING PAPER SERIES AT THE CENTRAL BANK: LESSONS FROM SUDAN
... production structure that is to some degree rigidified by the existing capital stock, reducing the short-run price elasticity of demand for ...
... production structure that is to some degree rigidified by the existing capital stock, reducing the short-run price elasticity of demand for ...
Considerations for South Sudan joining the East African Monetary
... normally managed by a supra-national central bank. In this process, national central banks are reduced to the level of branches of the supranational central bank, responsible for implementing rather than determining monetary policy. The common monetary policy may take various forms: the common centr ...
... normally managed by a supra-national central bank. In this process, national central banks are reduced to the level of branches of the supranational central bank, responsible for implementing rather than determining monetary policy. The common monetary policy may take various forms: the common centr ...
H o w N e w ... m a c r o e c o n o...
... adjustment mechanisms, an inflexible exchange rate may have benefits. The argument is that the absence of a price adjustment mechanism – that is, the absence of either exchange rate, or wage and price, flexibility – would help to ‘shake-out’ inefficient economic activities, and to shift resources in ...
... adjustment mechanisms, an inflexible exchange rate may have benefits. The argument is that the absence of a price adjustment mechanism – that is, the absence of either exchange rate, or wage and price, flexibility – would help to ‘shake-out’ inefficient economic activities, and to shift resources in ...
PDF
... agamst U S farmers by the early elghtIes have smce changed, although they may be less favorable than they were durmg the early seventIes Reduced exchange rates and lower prIces recelved by farmers relatlve to world levels suggest that condltlOns are now rIght for exports to begm to plck up If they d ...
... agamst U S farmers by the early elghtIes have smce changed, although they may be less favorable than they were durmg the early seventIes Reduced exchange rates and lower prIces recelved by farmers relatlve to world levels suggest that condltlOns are now rIght for exports to begm to plck up If they d ...
US Policy in the Bretton Woods Era - St. Louis Fed
... taxes on tourist expenditures, “buy America” programs, and “temporary” controls of foreign investment. Inflationary financing of the war in Vietnam and of domestic social spending more than offset any effect these programs may have had on the equilibrium value of the fixed, nominal exchange rate. In ...
... taxes on tourist expenditures, “buy America” programs, and “temporary” controls of foreign investment. Inflationary financing of the war in Vietnam and of domestic social spending more than offset any effect these programs may have had on the equilibrium value of the fixed, nominal exchange rate. In ...
The US dollar: Safe haven
... Not least the somewhat surprising dollar appreciation in May 2006 provides a motivation to investigate in greater depth the influence exerted by the US current account deficit on the safe-haven status of the US dollar. In the meantime, the Deutsche Bank (2006) has already taken up this issue in a br ...
... Not least the somewhat surprising dollar appreciation in May 2006 provides a motivation to investigate in greater depth the influence exerted by the US current account deficit on the safe-haven status of the US dollar. In the meantime, the Deutsche Bank (2006) has already taken up this issue in a br ...
Financial Performance
... – Figure 16.4 illustrates the use of exchange rate policy – in particular, a devaluation – to effect an internal and external balance. • The devaluation lowers the relative price of domestic goods. Exports rise, shifting the IS and BOP curves to the right. – Initial effect is to create a BOP surplus ...
... – Figure 16.4 illustrates the use of exchange rate policy – in particular, a devaluation – to effect an internal and external balance. • The devaluation lowers the relative price of domestic goods. Exports rise, shifting the IS and BOP curves to the right. – Initial effect is to create a BOP surplus ...
foreign exchange and money markets in the context
... changes. Given a longer term, the potential annual exchange rate changes diminish, thereby the interest rate corridor narrows. This study is based on an assumption of a free capital mobility and credibility of the national currency. Latvia does have a free capital flow needed to ensure realisation o ...
... changes. Given a longer term, the potential annual exchange rate changes diminish, thereby the interest rate corridor narrows. This study is based on an assumption of a free capital mobility and credibility of the national currency. Latvia does have a free capital flow needed to ensure realisation o ...
The Impact of the December 2004 Tsunami: An Empirical
... on high frequency data. Some, especially the emerging market studies, have included other potential determinants of stock return behavior such as foreign stock market returns, growth rates of domestic macroeconomic fundamentals, and variables that account for stock market liberalization and developm ...
... on high frequency data. Some, especially the emerging market studies, have included other potential determinants of stock return behavior such as foreign stock market returns, growth rates of domestic macroeconomic fundamentals, and variables that account for stock market liberalization and developm ...
Mankiw: Brief Principles of Macroeconomics, Second Edition
... • Real exchange rates show the value of a product in both countries. • Real exchange rates will determine who will export and who will import a product under free trade. • Suppose a TV monitor sells for $100 in the US and for ¥5000 in Japan. If the exchange rate between $ and ¥ is ¥100=$1, then the ...
... • Real exchange rates show the value of a product in both countries. • Real exchange rates will determine who will export and who will import a product under free trade. • Suppose a TV monitor sells for $100 in the US and for ¥5000 in Japan. If the exchange rate between $ and ¥ is ¥100=$1, then the ...
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.