NBER WORKING PAPER SERIES FEAR OF SUDDEN STOPS: Ricardo Caballero
... Domestic imbalances and terms of trade shocks are often exacerbated by sudden financial distress. In this paper we explore ways of overcoming external vulnerability, drawing lessons from a detailed comparison of the response of Chile and Australia to recent external shocks and from Australia’s histo ...
... Domestic imbalances and terms of trade shocks are often exacerbated by sudden financial distress. In this paper we explore ways of overcoming external vulnerability, drawing lessons from a detailed comparison of the response of Chile and Australia to recent external shocks and from Australia’s histo ...
Few Selected Questions
... the U.S. Export-Import Bank. The loan is to be paid back over the next seven years with a two-year grace period. ...
... the U.S. Export-Import Bank. The loan is to be paid back over the next seven years with a two-year grace period. ...
Purchasing Power Parity: Implication with respect to
... to sudden increase in price of food because food has a major portion in their consumption market and their per capita incomes are low. Fed has made both the world and American economies much less stable by ignoring inflationary early warning signals on the dollar standard’s periphery and eventual la ...
... to sudden increase in price of food because food has a major portion in their consumption market and their per capita incomes are low. Fed has made both the world and American economies much less stable by ignoring inflationary early warning signals on the dollar standard’s periphery and eventual la ...
Economics, by R. Glenn Hubbard and Anthony Patrick O'Brien
... © 2006 Prentice Hall Business Publishing Economics R. Glenn Hubbard, Anthony Patrick O’Brien—1st ed. ...
... © 2006 Prentice Hall Business Publishing Economics R. Glenn Hubbard, Anthony Patrick O’Brien—1st ed. ...
Regional Currency Arrangements: Insights from Europe
... certainly impossible to derive straightforward “laws” governing regional integration in the global political economy. In Europe, political cooperation and exchange rate stability have been regarded as key elements in preventing beggar-thy-neighbor policies through competitive devaluations, and thus ...
... certainly impossible to derive straightforward “laws” governing regional integration in the global political economy. In Europe, political cooperation and exchange rate stability have been regarded as key elements in preventing beggar-thy-neighbor policies through competitive devaluations, and thus ...
CHAPTER 2 SUGGESTED ANSWERS TO CHAPTER 2 QUESTIONS
... at the expense of a lower living standards for their populations (who find foreign goods and services more expensive). b. ...
... at the expense of a lower living standards for their populations (who find foreign goods and services more expensive). b. ...
THE RENMINBI ON THE INTERNATIONALISATION TRAIL
... The first aspect was capital account inconvertibility; China had only accepted convertibility for current account transactions. This strict separation between current and capital operations postulates a battery of controls and documentation requirements that are enforced by the centralised State Adm ...
... The first aspect was capital account inconvertibility; China had only accepted convertibility for current account transactions. This strict separation between current and capital operations postulates a battery of controls and documentation requirements that are enforced by the centralised State Adm ...
Chapter 18
... monetary growth, one effect is an automatic increase in monetary growth rates and inflation abroad. U.S. macroeconomic policies in the late 1960s helped cause the breakdown of the Bretton Woods system by ...
... monetary growth, one effect is an automatic increase in monetary growth rates and inflation abroad. U.S. macroeconomic policies in the late 1960s helped cause the breakdown of the Bretton Woods system by ...
Parallel market
... of a system of flexible exchange rates in international transactions, Greece has allowed the Greek drachma to float against major currencies since April 1975. The link to the US dollar was abandoned and a variable trade-weighted system was adopted, where the US dollar had the greatest weight. Greece ...
... of a system of flexible exchange rates in international transactions, Greece has allowed the Greek drachma to float against major currencies since April 1975. The link to the US dollar was abandoned and a variable trade-weighted system was adopted, where the US dollar had the greatest weight. Greece ...
Who put the holes in the Swiss cheese? Currency crisis under
... haven.1 For Switzerland, this led to increased capital imports and thus to a permanent appreciation pressure for the Swiss franc (CHF). In order to counteract this strong appreciation trend, the Swiss National Bank (SNB) introduced in September 2011 a minimum floor at the level of 1.20 CHF/EUR (SNB ...
... haven.1 For Switzerland, this led to increased capital imports and thus to a permanent appreciation pressure for the Swiss franc (CHF). In order to counteract this strong appreciation trend, the Swiss National Bank (SNB) introduced in September 2011 a minimum floor at the level of 1.20 CHF/EUR (SNB ...
NBER WORKING PAPER SERIES HISTORICAL PERSPECTIVE ON GLOBAL IMBALANCES Michael D. Bordo
... imbalances. Bordo, Eichengreen and Kim (1998), using the coefficients of an AR(1) regression as well as augmented Dickey Fuller (ADF) test find evidence of significantly greater persistence in both the deficits of the principal capital recipients and the capital exporters compared to the recent expe ...
... imbalances. Bordo, Eichengreen and Kim (1998), using the coefficients of an AR(1) regression as well as augmented Dickey Fuller (ADF) test find evidence of significantly greater persistence in both the deficits of the principal capital recipients and the capital exporters compared to the recent expe ...
Currency Union and Foreign Direct Investment Inflow: Evidence from
... well documented in the literature. Among the arguments are the ability of a currency union to reduce macroeconomic instability and destability speculation; increase in transparency and credibility of rules and policies (Lane, 2006; Usman and Ibrahim, 2012). The enlarged market as a result of a curre ...
... well documented in the literature. Among the arguments are the ability of a currency union to reduce macroeconomic instability and destability speculation; increase in transparency and credibility of rules and policies (Lane, 2006; Usman and Ibrahim, 2012). The enlarged market as a result of a curre ...
ECONOMICS CLUB CAPSULS FOR UNDER ACHIEVERS
... And when we eliminate the effect of price changes, this is real exchange rate (RER) Real effective exchange Rates ( REER) is based on real exchange rates. Another of the spot rate is Purchasing Power Parity (PPP). There are two versions of it:1) Absolute purchasing power parity. 2) Relative purchasi ...
... And when we eliminate the effect of price changes, this is real exchange rate (RER) Real effective exchange Rates ( REER) is based on real exchange rates. Another of the spot rate is Purchasing Power Parity (PPP). There are two versions of it:1) Absolute purchasing power parity. 2) Relative purchasi ...
an analytical study on indian currency rupee depreciation against
... prevent depreciation may result in a deterioration of confidence in the economy's ability to meet even its short-term external obligations. Since both outcomes are undesirable, the appropriate policy response is to find a balance that avoids either.” ...
... prevent depreciation may result in a deterioration of confidence in the economy's ability to meet even its short-term external obligations. Since both outcomes are undesirable, the appropriate policy response is to find a balance that avoids either.” ...
Press Statement Malawi Kwacha Depreciation and Near
... circumstances, therefore, the Kwacha depreciated precipitously from K437/US$ in June 2015 to K581/US$ in November 2015. Reserve Bank’s efforts to support the market continued, however. Thus, the central bank’s net foreign position dropped to US$366 million or 3 months of imports during the period. ...
... circumstances, therefore, the Kwacha depreciated precipitously from K437/US$ in June 2015 to K581/US$ in November 2015. Reserve Bank’s efforts to support the market continued, however. Thus, the central bank’s net foreign position dropped to US$366 million or 3 months of imports during the period. ...
NBER WORKING PAPER SERIES THE ROLE OF FINANCIAL STRUCTURE
... combination of downward nominal wage rigidity and a currency peg. The mechanism is as follows. Consider the economy’s adjustment to a negative tradable output shock, such as a deterioration in the terms of trade. Households respond to this negative external shock by lowering their demand for consump ...
... combination of downward nominal wage rigidity and a currency peg. The mechanism is as follows. Consider the economy’s adjustment to a negative tradable output shock, such as a deterioration in the terms of trade. Households respond to this negative external shock by lowering their demand for consump ...
FX-Adjusted Local Currency Spreads CEME
... cycle and economic indicators fall into the first category. Technical trading rules and order flow indicators fall into the second category.5 Fundamental variables account for very little of the observed variation in exchange rates for developed countries’ currencies over short-time horizons up to o ...
... cycle and economic indicators fall into the first category. Technical trading rules and order flow indicators fall into the second category.5 Fundamental variables account for very little of the observed variation in exchange rates for developed countries’ currencies over short-time horizons up to o ...
PDF
... effects to be significant. “While increased dollar-pound risk would be expected to reduce US exports to the UK, increased dollar-mark might increase the US to UK flow as US exporters substitute British for German markets” (Cushman, 1986, p.361). He indeed found significant third-country effects anal ...
... effects to be significant. “While increased dollar-pound risk would be expected to reduce US exports to the UK, increased dollar-mark might increase the US to UK flow as US exporters substitute British for German markets” (Cushman, 1986, p.361). He indeed found significant third-country effects anal ...
This PDF is a selection from an out-of-print volume from... of Economic Research
... is a rule-based monetary institution that is rather different from a central bank. Although there are variations, a typical currency board has two essential characteristics. First, the board has the obligation to exchange on demand local currency for some major international currency, which is often ...
... is a rule-based monetary institution that is rather different from a central bank. Although there are variations, a typical currency board has two essential characteristics. First, the board has the obligation to exchange on demand local currency for some major international currency, which is often ...
Information Asymmetry and Foreign Currency Borrowing by Small
... A further characteristic of foreign banks, which might lead to the surge in foreign currency loans, is that foreign banks may face more information asymmetry than domestic banks which typically have long-established relationships with their clients. This information asymmetry issue may be particula ...
... A further characteristic of foreign banks, which might lead to the surge in foreign currency loans, is that foreign banks may face more information asymmetry than domestic banks which typically have long-established relationships with their clients. This information asymmetry issue may be particula ...
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.