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macro-unit-vii-notes
macro-unit-vii-notes

... 0 Determined by the forces of supply and demand 0 Demand for any currency is downward sloping because as the currency becomes less expensive, people will be able to buy more of that nation’s goods and, therefore, want larger quantities of the currency 0 Supply of any currency is upward sloping becau ...
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... extensively in domestic production (using the example of an appreciating dollar), would become relatively less expensive due to a stronger dollar, thus lowering U.S. production costs and increasing U.S. supplier ...
the global imbalances: what is the problem
the global imbalances: what is the problem

... or pressure it to change its policies in the same way that the USA, acting sometimes through the IMF, has affected the policies of smaller debtor countries? The US fiscal deficit and the current account deficit Initially, from 2002, the rising US current account deficit was dominated by the US fisc ...
Internationalisation of currency in East Asia
Internationalisation of currency in East Asia

... in global financial markets. Obviously, this is not a workable definition. For an operational definition, it may be useful to identify the qualifications for an international currency. In general, money has three primary functions: as a medium of exchange, as a unit of account, and as a store of val ...
NBER WORKING PAPER SERIES DOLLAR SHORTAGES AND CRISES Raghuram G. Rajan Working Paper
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... holds significant amounts of government debt or the contingent liabilities of the banking system are borne by the government (see Burnside, Eichenbaum and Rebello (2001)). Similarly, the collapse in the exchange rate and the collapse in the banking system can occur close together, not just because ...
Chapter 15: Financial Markets and Expectations
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... be willing to absorb at least some of the price increase they could charge out of their profits. A foreign company may increase the price of exports by 6% and accept a 4% reduction in the price of its exports when the nation’s currency depreciates by 10% to avoid the risk of losing foreign markets b ...
PDF Download
PDF Download

... their fixed exchange rate regimes came after the outbreak of the global financial crisis in 2008. The countries were hit simultaneously by three severe disruptions. Firstly, the countries experienced sudden stops as net capital inflows ceased, leading to current account surpluses in 2009 in all thre ...
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... In a market economy, in order to influence the evolution of some economic events, the state can make use of the balance of payments, capital movement and, implicitely, the situation of the money supply in the respective country.1 The evolution of the balance of payments of a country is closely conne ...
FRBSF E L
FRBSF E L

... History has shown that this inflexibility and the subservience of monetary policy to fluctuations in gold supply and demand contributed to economic crises and depressions. The gold standard’s inability to cope with economic stress is reflected by its frequent curtailment during times of war and cris ...
Global Imbalances and the Financial Crisis
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... little or nothing to do with the crisis, which instead was the result of financial regulatory failures and policy errors, mainly on the part of the U.S. Others put forward various mechanisms through which global imbalances are claimed to have played a prime role in causing the financial collapse. Fo ...
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The Evolution of Exchange Rate Regime Choices in Turkey
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... main sources of this complexity. Inflationary turmoil after the collapse of the Bretton-Woods Agreement gave rise to unbearable volatility of FX rates, threatening the economic stability, not only in developing but also in developed countries, as well. Until the emergence of the European Currency Un ...
Global Imbalances and the Financial Crisis
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... As Paulson correctly observed, the imbalances and their attendant risks will emerge again once the current crisis is resolved. Since the Bretton Woods system was established after World War II, three of its features have worked at times to delay adjustment in current account imbalances. One is that ...
Open-Economy Macroeconomics: Basic Concepts
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... Higher than every other country’s net indebtedness. So, U.S. is “the world’s biggest debtor nation.” ...
CAN
CAN

... thank Reiko Nakamura for able research assistance. Support from the Smith Richardson Foundation is gratefully acknowledged. This research is part of NBER's research program in International Studies. Any opinions expressed are those of the authors not those of the National Bureau of Economic Research ...
Absorption Approach
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Internationalization of the RMB and Historical Precedents
Internationalization of the RMB and Historical Precedents

... of reflecting to some extent all kinds of international financial transactions (both long-term and short-term, banking and securities, bonds and equities). Moreover it is possible to patch together a data set covering the desired countries and years—though but just barely, and with increasing diffic ...
Internationalization of the RMB and Historical Precedents
Internationalization of the RMB and Historical Precedents

... of reflecting to some extent all kinds of international financial transactions (both long-term and short-term, banking and securities, bonds and equities). Moreover it is possible to patch together a data set covering the desired countries and years—though but just barely, and with increasing diffic ...
An exchange-rate-centred monetary policy system
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... Singapore, like other emerging Asian economies, has to tackle the consequences of sustained capital inflows following the adoption of unusual monetary policies in developed economies. Since 2010 (according to balance of payments data) Singapore has seen strong capital inflows accompanying the broad- ...
Exchange-Rate Targeting Advantages
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... 2. Targets using M0 and M3: changes over time 3. Allows growth outside target for 2-3 years, but them reverses overshoots 4. Key elements: flexibility, transparency, and accountability Copyright © 2001 Addison Wesley Longman ...
Currency and Monetary Arrangements for East
Currency and Monetary Arrangements for East

... If capital is mobile and the country chooses a fixed exchange rate, then it generally has to accept the interest rates of the country to which it fixes its currency. In this case, the authorities largely lose their discretion to set interest rates. If the country pegs to a low-inflation currency, it ...
(Textbook) Behavior in Organizations, 8ed (A. B. Shani)
(Textbook) Behavior in Organizations, 8ed (A. B. Shani)

... the general shift toward democratic political institutions and free market economies has encouraged FDI the globalization of the world economy is having a positive impact on the volume of FDI as firms undertake FDI to ensure they have a significant presence in many regions of the world ...
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Bretton Woods system

The Bretton Woods system of monetary management established the rules for commercial and financial relations among the United States, Canada, Western Europe, Australasia and Japan in the mid-20th century. The Bretton Woods system was the first example of a fully negotiated monetary order intended to govern monetary relations among independent nation-states. The chief features of the Bretton Woods system were an obligation for each country to adopt a monetary policy that maintained the exchange rate by tying its currency to gold and the ability of the IMF to bridge temporary imbalances of payments. Also, there was a need to address the lack of cooperation among other countries and to prevent competitive devaluation of the currencies as well.Preparing to rebuild the international economic system while World War II was still raging, 730 delegates from all 44 Allied nations gathered at the Mount Washington Hotel in Bretton Woods, New Hampshire, United States, for the United Nations Monetary and Financial Conference, also known as the Bretton Woods Conference. The delegates deliberated during 1–22 July 1944, and signed the Bretton Woods agreement on its final day. Setting up a system of rules, institutions, and procedures to regulate the international monetary system, these accords established the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD), which today is part of the World Bank Group. The United States, which controlled two thirds of the world's gold, insisted that the Bretton Woods system rest on both gold and the US dollar. Soviet representatives attended the conference but later declined to ratify the final agreements, charging that the institutions they had created were ""branches of Wall Street."" These organizations became operational in 1945 after a sufficient number of countries had ratified the agreement.On 15 August 1971, the United States unilaterally terminated convertibility of the US dollar to gold, effectively bringing the Bretton Woods system to an end and rendering the dollar a fiat currency. This action, referred to as the Nixon shock, created the situation in which the United States dollar became a reserve currency used by many states. At the same time, many fixed currencies (such as the pound sterling, for example), also became free-floating.
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