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... the euro at an overvalued rate and thus suffered from the inability to compete with exporting countries. The German economy underwent a process of competitive disinflation which resulted in their economy growing at a consistently lower rate than that of the euro area. If euro area economies aren’t p ...
... the euro at an overvalued rate and thus suffered from the inability to compete with exporting countries. The German economy underwent a process of competitive disinflation which resulted in their economy growing at a consistently lower rate than that of the euro area. If euro area economies aren’t p ...
the long-run behavior of the yen and the dollar
... is a good place to begin. Since exchange rates measure the relative values of currencies and currencies are used to buy the output of an economy — the gross domestic product — many analysts turn to the GDP deflator. This broad index, however, has the major drawback that foreign exchange is not used ...
... is a good place to begin. Since exchange rates measure the relative values of currencies and currencies are used to buy the output of an economy — the gross domestic product — many analysts turn to the GDP deflator. This broad index, however, has the major drawback that foreign exchange is not used ...
The Renminbi’s Ascendance in International Finance Eswar Prasad Preliminary draft
... the risks of a fully open capital account (see Kose, Prasad, Rogoff, and Wei, 2009, for an analytical discussion). The liberalization of inflows is important for attaining certain such collateral benefits. This liberalization has and would allow foreign investors to play a larger role in developing ...
... the risks of a fully open capital account (see Kose, Prasad, Rogoff, and Wei, 2009, for an analytical discussion). The liberalization of inflows is important for attaining certain such collateral benefits. This liberalization has and would allow foreign investors to play a larger role in developing ...
Coping with crises: is there a “silver bullet”?
... Introduction: Globalisation challenged Rome was not built in a day: nor can global capital markets be created overnight. The smooth functioning of a market economy needs more than freedom to buy and sell: institutions matter too, and creating them can take time. Accounting, banking and legal practic ...
... Introduction: Globalisation challenged Rome was not built in a day: nor can global capital markets be created overnight. The smooth functioning of a market economy needs more than freedom to buy and sell: institutions matter too, and creating them can take time. Accounting, banking and legal practic ...
Nicholas Brunner FIN 425 Dr. Margetis Capital Budgeting Project
... the net present value shall be conducted within the parent prospective. In order to project the change in the exchange rate over the ten year time period of the expansion, parity conditions must be utilized. Within this analysis the interest rate parity, relative purchasing power parity and the rand ...
... the net present value shall be conducted within the parent prospective. In order to project the change in the exchange rate over the ten year time period of the expansion, parity conditions must be utilized. Within this analysis the interest rate parity, relative purchasing power parity and the rand ...
Money and the Rule of Law in Ecuador
... rout of the sucre in 1999, laws were passed allowing bankers to make loans to themselves. In addition, state guarantees for bank deposits were introduced. These proved to be a deadly cocktail, one that allowed for massive looting of the banking system’s deposit base. (Akerlof and Romei, 1993) This, ...
... rout of the sucre in 1999, laws were passed allowing bankers to make loans to themselves. In addition, state guarantees for bank deposits were introduced. These proved to be a deadly cocktail, one that allowed for massive looting of the banking system’s deposit base. (Akerlof and Romei, 1993) This, ...
The Renminbi`s Dollar Peg at the Crossroads
... nominal exchange rate over a longer historical perspective. Following a period of substantial cumulative inflation, the official rate of the RMB was devalued sharply in 1994, albeit in tandem with unification of the official and parallel exchange markets.1 A slight appreciation followed. Very notabl ...
... nominal exchange rate over a longer historical perspective. Following a period of substantial cumulative inflation, the official rate of the RMB was devalued sharply in 1994, albeit in tandem with unification of the official and parallel exchange markets.1 A slight appreciation followed. Very notabl ...
The Renminbi`s Dollar Peg at the Crossroads
... nominal exchange rate over a longer historical perspective. Following a period of substantial cumulative inflation, the official rate of the RMB was devalued sharply in 1994, albeit in tandem with unification of the official and parallel exchange markets.1 A slight appreciation followed. Very notabl ...
... nominal exchange rate over a longer historical perspective. Following a period of substantial cumulative inflation, the official rate of the RMB was devalued sharply in 1994, albeit in tandem with unification of the official and parallel exchange markets.1 A slight appreciation followed. Very notabl ...
Pacific Basin Working Paper Series CAPITAL CONTROLS AND EXCHANGE RATE INSTABILITY
... that “…the relative absence of contagion effect on Chile [during the currency crises of the 1990s] is due to its sturdy banking regulation and not to its capital controls policy” (p. 22). This finding is supported by Edwards’ (1989) analysis of the role of capital controls in thirty-nine devaluation ...
... that “…the relative absence of contagion effect on Chile [during the currency crises of the 1990s] is due to its sturdy banking regulation and not to its capital controls policy” (p. 22). This finding is supported by Edwards’ (1989) analysis of the role of capital controls in thirty-nine devaluation ...
The Open Economy Revisited: the Mundell
... 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. ...
A Portfolio Theory of International Capital Flows Michael B. Devereux
... as a risk-sharing mechanism. By contrast, the model implies a unique welfare maximizing monetary rule for each country to follow (which requires ‡exible exchange rates). There are limitations of our analysis. To focus exclusively on a portfolio approach to the current account, we have only a single ...
... as a risk-sharing mechanism. By contrast, the model implies a unique welfare maximizing monetary rule for each country to follow (which requires ‡exible exchange rates). There are limitations of our analysis. To focus exclusively on a portfolio approach to the current account, we have only a single ...
Trilemmas and Tradeoffs: Living with Financial Globalization
... crisis. With economies growing more briskly than those of advanced countries, these EMEs did not require abnormally accommodative monetary policy settings. Currencies, bonds, equities, and real estate appreciated because of the resulting global portfolio shift into EME assets. Appreciation contribut ...
... crisis. With economies growing more briskly than those of advanced countries, these EMEs did not require abnormally accommodative monetary policy settings. Currencies, bonds, equities, and real estate appreciated because of the resulting global portfolio shift into EME assets. Appreciation contribut ...
Differences matter in emerging markets
... is average debt-to-GDP ratios. Developed markets’ average debt-to-GDP is now almost 114%, a 36.4 percentage point rise since the 2007 crisis, according to JP Morgan research. By contrast, emerging market debt-to-GDP ratios have actually fallen a couple of percentage points, to an average of 34% from ...
... is average debt-to-GDP ratios. Developed markets’ average debt-to-GDP is now almost 114%, a 36.4 percentage point rise since the 2007 crisis, according to JP Morgan research. By contrast, emerging market debt-to-GDP ratios have actually fallen a couple of percentage points, to an average of 34% from ...
the cuban dollarization
... Present dollarization of the Cuban economy is not of the same nature than that which characterized its past history, and cannot be interpreted as a return to the situation prevailing before 1959. The dollar has circulated continuously in Cuba between 1898 (first U.S. military intervention) and 1959 ...
... Present dollarization of the Cuban economy is not of the same nature than that which characterized its past history, and cannot be interpreted as a return to the situation prevailing before 1959. The dollar has circulated continuously in Cuba between 1898 (first U.S. military intervention) and 1959 ...
PDF
... developing countries as well as corresponding macroeconomic policies used to control inflation. Specifically, Bolivia faced an economic crisis culminating in hyperinflation from the later part of 1984 through mid-1985 (Melvin, 1988; Pastor, 1991)3. A large fiscaI deficit, negative growth rates, high ...
... developing countries as well as corresponding macroeconomic policies used to control inflation. Specifically, Bolivia faced an economic crisis culminating in hyperinflation from the later part of 1984 through mid-1985 (Melvin, 1988; Pastor, 1991)3. A large fiscaI deficit, negative growth rates, high ...
Chapter 6 : exchange rate determination : theory
... an x percent increase (depreciation) in st : inflation by a country of its currency leads to a decrease in the external value of its currency : intuitive effect of y : leads to an appreciation (less intuitive and in sharp contrast with trade approach of FX) increase in y leads to an increase in mone ...
... an x percent increase (depreciation) in st : inflation by a country of its currency leads to a decrease in the external value of its currency : intuitive effect of y : leads to an appreciation (less intuitive and in sharp contrast with trade approach of FX) increase in y leads to an increase in mone ...
The euro in the currency war - Conseil d`Analyse Economique
... has mostly been used to invest in local sovereign debt, as in the cases of Italy and Spain, rather than to finance businesses. This outcome has made both banks and sovereigns more vulnerable to each other.7 The bank’s reluctance to extend loans to the private sector can be partly explained by the cap ...
... has mostly been used to invest in local sovereign debt, as in the cases of Italy and Spain, rather than to finance businesses. This outcome has made both banks and sovereigns more vulnerable to each other.7 The bank’s reluctance to extend loans to the private sector can be partly explained by the cap ...
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.