The Mirage of Capital Controls by Sebastian Edwards
... both occasions, to protect the economy from the effects of “hot money,” to help avoid the strengthening of the currency that is associated with capital inflow, and to increase the Central Bank’s control over domestic monetary policy. During the 1978-82 period the controls were particularly stringent ...
... both occasions, to protect the economy from the effects of “hot money,” to help avoid the strengthening of the currency that is associated with capital inflow, and to increase the Central Bank’s control over domestic monetary policy. During the 1978-82 period the controls were particularly stringent ...
We’re all in this together: the transmission of international 1
... economies”. As economies have become more integrated, the importance of understanding how shocks (unanticipated changes in economic variables) in one or more countries can affect the stability of others has grown. The recent global crisis has also brought into sharp relief the connectedness between ...
... economies”. As economies have become more integrated, the importance of understanding how shocks (unanticipated changes in economic variables) in one or more countries can affect the stability of others has grown. The recent global crisis has also brought into sharp relief the connectedness between ...
NBER WORKING PAPER SERIES ISSUES IN KOREAN EXCHANGE RATE POLICY StanleyW. Black
... In a multiple currency world, “the” foreign exchange rate must be defined relative to each trading partner whose currency is used in external transactions. For Korea, the primary trading partners are North America, Japan, Europe, and Other Asia. The major currencies involved would thus be the US dol ...
... In a multiple currency world, “the” foreign exchange rate must be defined relative to each trading partner whose currency is used in external transactions. For Korea, the primary trading partners are North America, Japan, Europe, and Other Asia. The major currencies involved would thus be the US dol ...
S R F ?
... dollar in 1996. This peg was rigidly upheld until July 2005. For most of its early period, this pegged exchange rate regime attracted little criticism. Indeed, it was widely seen as contributing to internal and external stability. However, from 2002 onward, there was mounting pressure, both external ...
... dollar in 1996. This peg was rigidly upheld until July 2005. For most of its early period, this pegged exchange rate regime attracted little criticism. Indeed, it was widely seen as contributing to internal and external stability. However, from 2002 onward, there was mounting pressure, both external ...
The Euro and the Dollar: Toward a "Finance G-2"?
... came close to the size of the United States. Hence no currency could acquire the network externalities, economies of scale and scope, and public goods benefits necessary to rival the dollar at the global level. A largely similar situation for the United Kingdom explains the pound’s dominance in the ...
... came close to the size of the United States. Hence no currency could acquire the network externalities, economies of scale and scope, and public goods benefits necessary to rival the dollar at the global level. A largely similar situation for the United Kingdom explains the pound’s dominance in the ...
Proposals for a European Clearing Union
... in the last quarter of 2012. Greece’s debt problem has been prolonged, not solved. Spain is likely to remain in recession for 2013 and is caught in a cycle of decline (Hewitt 2012). Italy is similarly stuck in recession, slow to reform, politically unstable, and had its bonds downgraded to BBB- seve ...
... in the last quarter of 2012. Greece’s debt problem has been prolonged, not solved. Spain is likely to remain in recession for 2013 and is caught in a cycle of decline (Hewitt 2012). Italy is similarly stuck in recession, slow to reform, politically unstable, and had its bonds downgraded to BBB- seve ...
CESifo Working Paper no. 3164
... manufacturing output in the US and most European economies had reached its trough around mid-1932. However, few countries regained their 1929 output-levels before 1936, some not before 1939. As a general rule, recovery followed about half a year after a country had abandoned the interwar gold-exchan ...
... manufacturing output in the US and most European economies had reached its trough around mid-1932. However, few countries regained their 1929 output-levels before 1936, some not before 1939. As a general rule, recovery followed about half a year after a country had abandoned the interwar gold-exchan ...
Principles of Macroeconomics, Case/Fair/Oster, 10e
... increase in the economic activity of one country to lead to a worldwide increase in economic activity, which then feeds back to that country. An increase in U.S. imports increases other countries’ exports, which stimulates those countries’ economies and increases their imports, which increases U.S. ...
... increase in the economic activity of one country to lead to a worldwide increase in economic activity, which then feeds back to that country. An increase in U.S. imports increases other countries’ exports, which stimulates those countries’ economies and increases their imports, which increases U.S. ...
The Emerging Market Economies in Times of Taper-Talk and Actual Tapering
... evolution of several macro/financial variables by looking for values that might signal the possibility of an approaching crisis. For most of the countries considered in the analysis, I only find a few signals. The exceptions are Indonesia and Turkey which stand out for their large number of signals. ...
... evolution of several macro/financial variables by looking for values that might signal the possibility of an approaching crisis. For most of the countries considered in the analysis, I only find a few signals. The exceptions are Indonesia and Turkey which stand out for their large number of signals. ...
A New Currency for the East African Community?
... as fiscal policy, labor mobility, and wage and price flexibility. In this work we provide support for the establishment of a common currency in the East African Community (EAC). We do so by testing whether the Generalized Purchasing Power Parity (G-PPP) holds in the EAC by means of fractional coint ...
... as fiscal policy, labor mobility, and wage and price flexibility. In this work we provide support for the establishment of a common currency in the East African Community (EAC). We do so by testing whether the Generalized Purchasing Power Parity (G-PPP) holds in the EAC by means of fractional coint ...
This PDF is a selection from an out-of-print volume from the... of Economic Research Volume Title: The Risk of Economic Crisis
... this score: both international goods and international financial markets were already highly integrated by the late nineteenth century, and it is not clear how much economic difference being able to carry out a transaction in a second via computer, as opposed to an hour via the telegraph, really mak ...
... this score: both international goods and international financial markets were already highly integrated by the late nineteenth century, and it is not clear how much economic difference being able to carry out a transaction in a second via computer, as opposed to an hour via the telegraph, really mak ...
Thomas Plümper Department of Government, University of Essex Eric Neumayer
... In the empirical section of this paper we test the predictions of our theory with respect to exchange rate regime choice with multiple key currencies. We find that imports from the country issuing the key currency and imports from countries that have already pegged to that currency explain a countr ...
... In the empirical section of this paper we test the predictions of our theory with respect to exchange rate regime choice with multiple key currencies. We find that imports from the country issuing the key currency and imports from countries that have already pegged to that currency explain a countr ...
A Primer on the Euro Breakup
... > The mechanics of a currency breakup are surprisingly straightforward; the real problem for Europe is overvalued real effective exchange rates and extremely high debt – Historically, moving from one currency to another has not led to severe economic or legal problems. In almost all cases, the trans ...
... > The mechanics of a currency breakup are surprisingly straightforward; the real problem for Europe is overvalued real effective exchange rates and extremely high debt – Historically, moving from one currency to another has not led to severe economic or legal problems. In almost all cases, the trans ...
real exchange rate
... • According to the theory of purchasing-power parity, a unit of currency should buy the same quantity of goods in all countries. • The nominal exchange rate between the currencies of two countries should reflect the countries’ price levels in those countries. ...
... • According to the theory of purchasing-power parity, a unit of currency should buy the same quantity of goods in all countries. • The nominal exchange rate between the currencies of two countries should reflect the countries’ price levels in those countries. ...
c. crises in peripheral eurozone economies
... rates and exchange rates in real terms. As a result, in the Eurozone peripheral countries the lower real interest rates and the more appreciated real exchange rates stimulated capital inflows, growth, external deficit and external debt. These capital inflows accelerated because risk convergence took ...
... rates and exchange rates in real terms. As a result, in the Eurozone peripheral countries the lower real interest rates and the more appreciated real exchange rates stimulated capital inflows, growth, external deficit and external debt. These capital inflows accelerated because risk convergence took ...
4 Aspects of the Brazilian Experience with the Gold
... this lack of enthusiasm was often added the idea that fluctuations in the foreign exchange market were too large to allow meaningful ‘lean against the wind’ actions. This was reinforced by growing budget deficits and the small size of domestic capital markets, which actually prevented the use of eit ...
... this lack of enthusiasm was often added the idea that fluctuations in the foreign exchange market were too large to allow meaningful ‘lean against the wind’ actions. This was reinforced by growing budget deficits and the small size of domestic capital markets, which actually prevented the use of eit ...
Spot rate
... Interest Rates and Exchange Rates: International Financing Issues • Lower inflation leads to lower interest rates, so borrowing in low-interest countries may appear attractive to multinational firms. • However, currencies in low-inflation countries tend to appreciate against those in highinflation ...
... Interest Rates and Exchange Rates: International Financing Issues • Lower inflation leads to lower interest rates, so borrowing in low-interest countries may appear attractive to multinational firms. • However, currencies in low-inflation countries tend to appreciate against those in highinflation ...
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... and resolution, and building a new international financial architecture with a regional focus. Progress in these areas would have helped prevent, or at least minimize, both the East Asian crisis and more recent ...
... and resolution, and building a new international financial architecture with a regional focus. Progress in these areas would have helped prevent, or at least minimize, both the East Asian crisis and more recent ...
Foreign Currency Derivatives
... • Last trading day – contracts may be traded through the second business day prior to maturity date • Collateral & maintenance margins – the purchaser or trader must deposit an initial margin or collateral; this requirement is similar to a performance bond – At the end of each trading day, the accou ...
... • Last trading day – contracts may be traded through the second business day prior to maturity date • Collateral & maintenance margins – the purchaser or trader must deposit an initial margin or collateral; this requirement is similar to a performance bond – At the end of each trading day, the accou ...
Currency Transactions Costs and Competing Fiat Currencies*
... other. Early approaches to making currencies imperfect substitutes involved either introducing the currencies in the utility function or restricted the type of goods that could be purchased with a particular currency. Only recently have transaction costs been explicitly modelled as the source of cur ...
... other. Early approaches to making currencies imperfect substitutes involved either introducing the currencies in the utility function or restricted the type of goods that could be purchased with a particular currency. Only recently have transaction costs been explicitly modelled as the source of cur ...
FRBSF E L CONOMIC ETTER
... in capital flows may be more extreme in countries with weak financial systems, where government guarantees may encourage excessive risk-taking with foreign funds. Second, greater openness also restricts policymakers’ options. A country cannot simultaneously maintain an open capital account, peg the ...
... in capital flows may be more extreme in countries with weak financial systems, where government guarantees may encourage excessive risk-taking with foreign funds. Second, greater openness also restricts policymakers’ options. A country cannot simultaneously maintain an open capital account, peg 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.