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The constraints that external linkages impose on domestic policy choices in Saudi Arabia have continuously evolved over the past four decades. This paper argues that two major ongoing developments in particular have affected and will continue to affect policy trade-offs. First, growing oil needs of emerging market economies (EMEs), and specifically those of developing Asia, have strengthened economic links between the Far East and Saudi Arabia. Second, financial sector development in Saudi Arabia has gradually strengthened the monetary transmission mechanism. The former implies the increased importance of developing Asia’s growth cycle for the Saudi economy, while the latter suggests greater influence of U.S. monetary policy on the non-oil economy through the peg to the U.S dollar. As a result, divergence between the growth cycles in developing Asia and the United States has the potential to increasingly generate tension between policy objectives in Saudi Arabia.

Saudi Arabia --- Arabia saudita --- ʻArabīyah as Saʻūdīyah --- ʻArav ha-Saʻudit --- Hejaz and Nejd --- Kingdom of Saudi Arabia --- Mamlaka al-ʻArabiya as-Saʻudiya --- Mamlakah al-ʻArabīyah al-Saʻūdīyah --- Reino de Arabia Saudi --- Saudiarabien --- Saudovskai︠a︡ Aravii︠a︡ --- Sauji Arabia --- Saujiarabia --- Sha-tʻse A-la-po --- ערב הסעודית‏ --- サウディ・アラビア --- サウジアラビア --- Hejaz (Kingdom) --- Economic policy. --- Economic conditions. --- Foreign economic relations. --- Petroleum industry and trade --- E-books --- Investments: Energy --- Macroeconomics --- Money and Monetary Policy --- Taxation --- Energy: Demand and Supply --- Prices --- Business Taxes and Subsidies --- Energy: General --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Prices, Business Fluctuations, and Cycles: General (includes Measurement and Data) --- Public finance & taxation --- Investment & securities --- Monetary economics --- Economic growth --- Oil prices --- Oil, gas and mining taxes --- Oil --- Credit --- Business cycles --- Taxes --- Commodities --- Money

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The yen is an important barometer for the Japanese economy. Depreciations are typically associated with favorable economic developments such as increased corporate profits, rising equity prices, and upward pressure on domestic consumer prices. On the other hand, large and sharp appreciations run the risk of lowering actual and expected inflation, squeezing corporate profits, generating a negative wealth effect through depressed equity prices, and reducing confidence in the Bank of Japan’s efforts to reflate the domestic economy and achieve the inflation target. This paper takes a closer look at underlying drivers of rapid yen appreciations, highlighting the key role of carry-trade and the zero lower bound as important amplifiers.

Yen, Japanese. --- Japan--Economic conditions. --- Economic history. --- Japanese yen --- Money --- Economic conditions --- History, Economic --- Economics --- Banks and Banking --- Econometrics --- Foreign Exchange --- Investments: Futures --- Money and Monetary Policy --- Bayesian Analysis: General --- Time-Series Models --- Dynamic Quantile Regressions --- Dynamic Treatment Effect Models --- Diffusion Processes --- State Space Models --- Interest Rates: Determination, Term Structure, and Effects --- Monetary Policy --- Monetary Systems --- Standards --- Regimes --- Government and the Monetary System --- Payment Systems --- Pension Funds --- Non-bank Financial Institutions --- Financial Instruments --- Institutional Investors --- Currency --- Foreign exchange --- Finance --- Monetary economics --- Econometrics & economic statistics --- Exchange rates --- Currencies --- Vector autoregression --- Futures --- Zero lower bound --- Econometric analysis --- Financial institutions --- Financial services --- Derivative securities --- Interest rates --- United States

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Anatomy of Sudden Yen Appreciations.

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In this paper we examine how target ranges work in the context of a Barro-Gordon (1983) type model, in which the time-inconsistency problem stems from political pressures from the government. We show that target ranges turn out to be an excellent way to cope with the time-inconsistency problem, and achieve many of the benefits that arise under practically less attractive solutions such as the conservative central banker and optimal inflation contracts. Our theoretical model also shows how an inflation targeting range should be set and how it should respond to changes in the nature of shocks to the economy.