Lecture 17
... • This is the requirement that exporters and importers have access to foreign exchange. If foreign exchange is rationed then world market prices are not the effective prices. • The key point here is convertibility of the current account (imports, exports of goods and services). This means that forei ...
... • This is the requirement that exporters and importers have access to foreign exchange. If foreign exchange is rationed then world market prices are not the effective prices. • The key point here is convertibility of the current account (imports, exports of goods and services). This means that forei ...
Exchange Rate Determination: The Theoretical Thread
... The Russian Crisis of 1998 • Debt service had become a real problem • Capital flight was taking place • The ruble traded via a managed float that had been continually adjusted since 1996 • August 7, 1998 began the “August Crash” with the announcement that currency reserves had fallen $800M in the la ...
... The Russian Crisis of 1998 • Debt service had become a real problem • Capital flight was taking place • The ruble traded via a managed float that had been continually adjusted since 1996 • August 7, 1998 began the “August Crash” with the announcement that currency reserves had fallen $800M in the la ...
Lecture 2
... refers to fears of de-industrialization that gripped the Netherlands following the appreciation of Dutch guilder after the discovery of natural gas deposits in North Sea around 1960 Is it Dutch? Is it a disease? Some say No, viewing it simply as matter of one sector’s benefiting at the expense of ...
... refers to fears of de-industrialization that gripped the Netherlands following the appreciation of Dutch guilder after the discovery of natural gas deposits in North Sea around 1960 Is it Dutch? Is it a disease? Some say No, viewing it simply as matter of one sector’s benefiting at the expense of ...
Currency Board and Crawling Peg
... Smoothing Adjustment by a Crawling Peg A crawling peg is situated somewhere between fixed and flexible exchange rates. The continual rise of the central rate allows for an adjustment of inflation differentials, but only along a predetermined, nonstochastic path. Suppose that consumer prices rise by ...
... Smoothing Adjustment by a Crawling Peg A crawling peg is situated somewhere between fixed and flexible exchange rates. The continual rise of the central rate allows for an adjustment of inflation differentials, but only along a predetermined, nonstochastic path. Suppose that consumer prices rise by ...
Chapter 2
... of macroeconomic shocks from one nation to another. International financial systems based on rules have evolved to balance these trade-offs. … and the Rules of the Game are ... McGraw Hill / Irwin ...
... of macroeconomic shocks from one nation to another. International financial systems based on rules have evolved to balance these trade-offs. … and the Rules of the Game are ... McGraw Hill / Irwin ...
FRBSF E CONOMIC
... borders. Arguably, this uncertainty hinders international trade and, therefore, takes a toll in terms of economic welfare. Recent work in economics has turned to reexamining the question of whether having a stable exchange rate is worth these efforts. This research has used new tools to assess the e ...
... borders. Arguably, this uncertainty hinders international trade and, therefore, takes a toll in terms of economic welfare. Recent work in economics has turned to reexamining the question of whether having a stable exchange rate is worth these efforts. This research has used new tools to assess the e ...
Price and wage flexibility
... similarity of shocks – called “symmetry” meta property, because of its importance •Ishiyama points out that differences in inflation rates and wage flexibility are of the utmost importance •The usefulness of a common currency depends on the openness of the country, •Countries prone to shocks should ...
... similarity of shocks – called “symmetry” meta property, because of its importance •Ishiyama points out that differences in inflation rates and wage flexibility are of the utmost importance •The usefulness of a common currency depends on the openness of the country, •Countries prone to shocks should ...
Principles of Economic Growth
... refers to fears of de-industrialization that gripped the Netherlands following the appreciation of Dutch guilder after the discovery of natural gas deposits in North Sea around 1960 Is it Dutch? Is it a disease? Some say No, viewing it simply as matter of one sector’s benefiting at the expense of ...
... refers to fears of de-industrialization that gripped the Netherlands following the appreciation of Dutch guilder after the discovery of natural gas deposits in North Sea around 1960 Is it Dutch? Is it a disease? Some say No, viewing it simply as matter of one sector’s benefiting at the expense of ...
Why Currency Mismatches Matter
... Australian dollar to depreciate to cushion the effects of a slowdown in its two most important export markets (Japan and Korea). As a result, the Australian economy grew by over 5 percent in 1998. But when a currency crisis hits an economy with substantial unhedged foreign currency–denominated debt ...
... Australian dollar to depreciate to cushion the effects of a slowdown in its two most important export markets (Japan and Korea). As a result, the Australian economy grew by over 5 percent in 1998. But when a currency crisis hits an economy with substantial unhedged foreign currency–denominated debt ...
overvalued exchange rate
... – Since enom, P and PFor are fixed in the short run then under the fixed exchange rate, e is also fixed over this period. – But now output is above its equilibrium level and P starts to increase which shifts back the LM curve. – As a result, e increases and NX fall. – Note that P has to rise by enou ...
... – Since enom, P and PFor are fixed in the short run then under the fixed exchange rate, e is also fixed over this period. – But now output is above its equilibrium level and P starts to increase which shifts back the LM curve. – As a result, e increases and NX fall. – Note that P has to rise by enou ...
Document
... well in the medium to long term. • The smaller and less liquid markets, however, frequently demonstrate behaviors that seemingly contradict the theory. • The problem lies not in the theory, but in the relevance of the assumptions underlying the theory. ...
... well in the medium to long term. • The smaller and less liquid markets, however, frequently demonstrate behaviors that seemingly contradict the theory. • The problem lies not in the theory, but in the relevance of the assumptions underlying the theory. ...
Chapter17
... When the supply of money starts growing quickly, the price level also takes off, and the German mark depreciates. • When the money supply stabilizes, so does the price level and the exchange rate. ...
... When the supply of money starts growing quickly, the price level also takes off, and the German mark depreciates. • When the money supply stabilizes, so does the price level and the exchange rate. ...
Full Text
... for US assets, even if American authorities (particularly Fed Chairman Ben Bernanke) have repeatedly sought to reassure the markets in this regard. Confronted with this prospect of an ongoing supply of dollars from American residents, market normalisation would encourage investors to diversify their ...
... for US assets, even if American authorities (particularly Fed Chairman Ben Bernanke) have repeatedly sought to reassure the markets in this regard. Confronted with this prospect of an ongoing supply of dollars from American residents, market normalisation would encourage investors to diversify their ...
Central Bank Digital Currency and the Future of Monetary Policy
... Indeed, in a market economy, it is logically impossible to define the value of the currency in terms of the general price level, because the prices of individual goods and services are set by businesses operating in specific markets rather than determined by a central planner. -- Although government ...
... Indeed, in a market economy, it is logically impossible to define the value of the currency in terms of the general price level, because the prices of individual goods and services are set by businesses operating in specific markets rather than determined by a central planner. -- Although government ...
Balanced Global Economy Growth: Responsibility and Policy of China and USA
... The imbalance in the global economy is an historical problem for human beings as well as the deficit of America’s current account. However, after the sub-prime crisis, many American state officers and specialists made up a new story upon the imbalance of the global economy, the basic logic of it is ...
... The imbalance in the global economy is an historical problem for human beings as well as the deficit of America’s current account. However, after the sub-prime crisis, many American state officers and specialists made up a new story upon the imbalance of the global economy, the basic logic of it is ...
Ch. 21
... French monetary policy too tight 2. Open to speculative attacks Europe, Sept. 1992; Mexico: 1994; Asia: 1997 3. Successful speculative attack disastrous for emerging market countries because it leads to financial crisis 4. Weakened accountability: lose exchange-rate signal © 2004 Pearson Addison-Wes ...
... French monetary policy too tight 2. Open to speculative attacks Europe, Sept. 1992; Mexico: 1994; Asia: 1997 3. Successful speculative attack disastrous for emerging market countries because it leads to financial crisis 4. Weakened accountability: lose exchange-rate signal © 2004 Pearson Addison-Wes ...
Chapter 2
... numerous trade restrictions among Canada, Mexico, and the U.S. In 2001, trade negotiations were initiated for a free trade area of the Americas. 34 countries are involved. C2 - 22 ...
... numerous trade restrictions among Canada, Mexico, and the U.S. In 2001, trade negotiations were initiated for a free trade area of the Americas. 34 countries are involved. C2 - 22 ...
Chapter 15:
... The first section of the chapter examines the types of financial flows: portfolio flows and foreign direct investment flows. The point is made, contrary to popular opinion, that the majority of foreign direct investment takes place between developed economies and is long term in nature. Trends in me ...
... The first section of the chapter examines the types of financial flows: portfolio flows and foreign direct investment flows. The point is made, contrary to popular opinion, that the majority of foreign direct investment takes place between developed economies and is long term in nature. Trends in me ...
Discussions over the Currency Policy in the NEP Period
... one aspect of the disturbance of the equilibrium of the whole system. The idea of lowering the exchange rate, therefore, in practice is not restoration of the existing monetary circulation but is connected with a policy of inflation4.” Yurovsky observed that there was only one way to bring domestic ...
... one aspect of the disturbance of the equilibrium of the whole system. The idea of lowering the exchange rate, therefore, in practice is not restoration of the existing monetary circulation but is connected with a policy of inflation4.” Yurovsky observed that there was only one way to bring domestic ...
Slide 1
... Balance of payments accounting Helps us keep track of both changes in a country’s indebtedness to foreigners and the fortunes of its export- and import-competing industries ...
... Balance of payments accounting Helps us keep track of both changes in a country’s indebtedness to foreigners and the fortunes of its export- and import-competing industries ...
Chapter 6
... • Stock and bond prices will also be more comparable and there should be more cross-border investing. However, nonEuropean investors may not achieve as much diversification as in the past. ...
... • Stock and bond prices will also be more comparable and there should be more cross-border investing. However, nonEuropean investors may not achieve as much diversification as in the past. ...
Chapter 17
... late the government will start to print money to finance the deficit. A “self-fulfilling” currency crisis occurs when: – speculation feeds on itself (instead of being driven by “fundamentals”): if speculators believe an attack will succeed, they coordinate and make the attack successful. Example: If ...
... late the government will start to print money to finance the deficit. A “self-fulfilling” currency crisis occurs when: – speculation feeds on itself (instead of being driven by “fundamentals”): if speculators believe an attack will succeed, they coordinate and make the attack successful. Example: If ...
Trade, Exchange Rates, and Public Policy
... the European G7 members to engage in significant “fiscal stimulus,” such as tax cuts or increases in government spending. The U.S. Treasury secretary also presses Japan to halt it recent efforts to devalue the yen relative to the dollar. At the press conference at the conclusion of the meeting, Fren ...
... the European G7 members to engage in significant “fiscal stimulus,” such as tax cuts or increases in government spending. The U.S. Treasury secretary also presses Japan to halt it recent efforts to devalue the yen relative to the dollar. At the press conference at the conclusion of the meeting, Fren ...
Jaime Caruana - Federal Reserve Bank of Kansas City
... on those countries’ own policies and institutions. And it would not be difficult to add to this list. A number of factors combine to make nation states less than willing to cooperate on monetary policy. For instance, monetary policy can be redistributional, shifting wealth and income between credito ...
... on those countries’ own policies and institutions. And it would not be difficult to add to this list. A number of factors combine to make nation states less than willing to cooperate on monetary policy. For instance, monetary policy can be redistributional, shifting wealth and income between credito ...
International finance and the foreign exchange market
... • Factors that cause a currency to depreciate: • A rapid growth of income (relative to trading partners) that stimulates imports relative to exports. • A higher rate of inflation than one's trading partners. • A reduction in domestic real interest rates (relative to rates abroad). ...
... • Factors that cause a currency to depreciate: • A rapid growth of income (relative to trading partners) that stimulates imports relative to exports. • A higher rate of inflation than one's trading partners. • A reduction in domestic real interest rates (relative to rates abroad). ...