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This paper uses a common trends model to study how prices, the black market exchange rate, money, and real output have developed over a period covering both pre- and post-revolution Iranian data. It is shown that monetary shocks have significant short-run effects on output, but permanent effects on the price level and exchange rate, that is, expansionary monetary policy is not consistent with achieving low inflation or a stable unified exchange rate. The real shocks generate higher growth and lower inflation, suggesting that supply-side policies are consistent with the goals in the Islamic Republic of Iran’s second five-year development plan.

Foreign Exchange --- Inflation --- Money and Monetary Policy --- Time-Series Models --- Dynamic Quantile Regressions --- Dynamic Treatment Effect Models --- Diffusion Processes --- State Space Models --- Price Level --- Deflation --- Demand for Money --- Open Economy Macroeconomics --- Currency --- Foreign exchange --- Monetary economics --- Macroeconomics --- Exchange rates --- Purchasing power parity --- Demand for money --- Money --- Prices --- Iran, Islamic Republic of

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Bid-ask spreads for Asian emerging market currencies increased sharply during the Asian crisis. A key question is whether such wide spreads were excessive or explained by models of bid-ask spreads. Precrisis estimates of standard models show that spreads during the crisis were in most cases tighter than spreads predicted by the models and there are few cases of excessive spreads. The result is largely explained by the substantial increase in exchange rate volatility during the crisis and to some extent by the level change. The empirical models have greater explanatory power for emerging- than for mature-market currencies.

Banks and Banking --- Finance: General --- Foreign Exchange --- Money and Monetary Policy --- International Financial Markets --- Monetary Systems --- Standards --- Regimes --- Government and the Monetary System --- Payment Systems --- General Financial Markets: General (includes Measurement and Data) --- Financing Policy --- Financial Risk and Risk Management --- Capital and Ownership Structure --- Value of Firms --- Goodwill --- Finance --- Currency --- Foreign exchange --- Monetary economics --- Financial services law & regulation --- Currency markets --- Exchange rates --- Currencies --- Emerging and frontier financial markets --- Exchange rate risk --- Foreign exchange market --- Money --- Financial services industry --- Financial risk management --- Hong Kong Special Administrative Region, People's Republic of China

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"Countries face a range of shocks that can contribute to higher volatility in aggregate output and, in extreme cases, to economic crises. The presence of such risks underlies a potential demand for mechanism to soften the blow from adverse economic shocks. Such a protective infrastructure is referred to in this paper as "country insurance." Protective measures that countries can take themselves ("self-insurance") include sound economic policies, robust financial structures, and adequate reserve coverage. Beyond self-insurance, countries have also established regional arrangements that pool risks while, at the multilateral level, the IMF plays a central role through the temporary provision of its resources when shocks create balance of payments difficulties for a member, and through the policy advice it provides under surveillance. The Occasional paper focuses on what countries can do on their own -- that is, on the role of domestic policies -- with respect to country insurance."--Preface

Economic policy and planning (general) --- Public debt --- Balance of payments --- Debts, Public --- Reserves (Accounting) --- Financial crises --- Debt service --- Balance des paiements --- Dettes publiques --- Reserves (Comptabilite) --- Crises financieres --- Service de la dette --- Crises financières --- Réserves (Comptabilité) --- Economic policy --- Government liability --- 330.05 --- 338.9 --- Government immunity --- Government responsibility --- Liability, Government --- Liability, Public --- Liability of the state --- Public liability --- Sovereign immunity --- State liability --- State responsibility --- Tort liability of the government --- Tort liability of the state --- Administrative law --- Administrative responsibility --- Constitutional law --- Liability (Law) --- Misconduct in office --- Public law --- Torts --- Act of state --- Constitutional torts --- State action (Civil rights) --- Debts, Government --- Government debts --- National debts --- Public debts --- Sovereign debt --- Debt --- Bonds --- Deficit financing --- Economic nationalism --- Economic planning --- National planning --- State planning --- Economics --- Planning --- National security --- Social policy --- Law and legislation --- Balance of payments - Developing countries. --- Debts, Public - Developing countries. --- Reserves (Accounting) - Developing countries. --- Financial crises - Developing countries. --- Debt service - Developing countries. --- Balance des paiements - Nouveaux pays industrialises. --- Dettes publiques - Nouveaux pays industrialises. --- Reserves (Comptabilite) - Nouveaux pays industrialises. --- Crises financieres - Nouveaux pays industrialises. --- Service de la dette - Nouveaux pays industrialises.

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Using company-level data, this paper examines the relative stock-market performance of firms with different foreign-exchange exposures around the time of the 1994/95 Mexican crisis. Contrary to what one might have expected given the alleged peso overvaluation, exporting firms outperformed the market beginning in late 1993. Although interest rates fail to show a clear confidence loss in the exchange rate regime, the relative performance of net exporters suggests that expectations of devaluation increased continuously. The methodology presented is relevant beyond the Mexican case: sectoral differences in stock market performance may constitute valuable leading indicators of exchange rate changes in emerging markets.

Exports and Imports --- Finance: General --- Foreign Exchange --- Financial Markets and the Macroeconomy --- Open Economy Macroeconomics --- Information and Market Efficiency --- Event Studies --- General Financial Markets: General (includes Measurement and Data) --- Trade: General --- Currency --- Foreign exchange --- Finance --- International economics --- Exchange rates --- Stock markets --- Exchange rate adjustments --- Exchange rate arrangements --- Exports --- Financial markets --- International trade --- Stock exchanges --- United States

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This paper focuses on what countries can do on their own—that is, on the role of domestic policies—with respect to country insurance. Member countries are routinely faced with a range of shocks that can contribute to higher volatility in aggregate output and, in extreme cases, to economic crises. The presence of such risks underlies a potential demand for mechanisms to soften the blow from adverse economic shocks. For all countries, the first line of defense against adverse shocks is the pursuit of sound policies. In light of the large costs experienced by emerging markets and developing countries as a result of past debt crises, fiscal policies should seek to improve sustainability, taking into account that sustainable debt levels seem to be lower in emerging and developing countries than in advanced countries. Although much can be accomplished by individual countries through sound policies, risk management, and self-insurance through reserves, collective insurance arrangements are likely to continue playing a key role in cushioning countries from the impact of shocks.

Balance of payments -- Developing countries. --- Debt service -- Developing countries. --- Debts, Public -- Developing countries. --- Financial crises -- Developing countries. --- Reserves (Accounting) -- Developing countries. --- Exports and Imports --- Finance: General --- Financial Risk Management --- Investments: General --- Investments: Bonds --- Banks and Banking --- Insurance --- General Financial Markets: General (includes Measurement and Data) --- International Investment --- Long-term Capital Movements --- Financial Crises --- Foreign Exchange --- Current Account Adjustment --- Short-term Capital Movements --- Monetary Policy --- Insurance Companies --- Actuarial Studies --- Finance --- International economics --- Economic & financial crises & disasters --- Investment & securities --- Insurance & actuarial studies --- Banking --- Sudden stops --- Emerging and frontier financial markets --- Foreign direct investment --- Bonds --- Financial crises --- Balance of payments --- Financial markets --- Reserve positions --- Central banks --- Financial institutions --- Capital movements --- Financial services industry --- Investments, Foreign --- Financial instruments --- Foreign exchange reserves --- United States