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After the speculative attacks on government-controlled exchange rates in Europe and in Mexico, economists began to develop models of currency crises with multiple solutions. In these models, a currency crisis occurs when the economy suddenly jumps from one solution to another. This paper examines one of the new models, finding that raising the cost of devaluation may make a crisis more likely. Consequently, slow convergence to a monetary union, which increases the cost to the government of reneging on an exchange rate peg, may be counterproductive. This conclusion is exactly the opposite of that obtained from earlier models.
Foreign Exchange --- Money and Monetary Policy --- Monetary Systems --- Standards --- Regimes --- Government and the Monetary System --- Payment Systems --- Currency --- Foreign exchange --- Monetary economics --- Conventional peg --- Exchange rates --- Currencies --- Exchange rate adjustments --- Money --- Exchange rate devaluation --- Mexico
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This paper presents an overview of Argentina’s economic developments in the past 10 years. Argentina’s impressive growth over the past decade has been accompanied by the accumulation of a number of major vulnerabilities. Policy inconsistencies were exposed in early 2014 when mounting balance-of-payments pressures culminated in a sharp devaluation of the peso. Subsequent to the devaluation, domestic imbalances were exacerbated by a deteriorating external environment. At the same time, the dispute with holdout creditors continued to impede Argentina’s access to international capital markets. The combination of weak external demand, fast eroding competitiveness, and compromised access to international capital markets fueled balance of payments pressures in 2014.
Foreign Exchange --- Inflation --- Money and Monetary Policy --- Price Level --- Deflation --- Monetary Systems --- Standards --- Regimes --- Government and the Monetary System --- Payment Systems --- Currency --- Foreign exchange --- Macroeconomics --- Monetary economics --- Exchange restrictions --- Exchange rates --- Currencies --- Prices --- Money --- Argentina
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The impact of real exchange rate movements on GDP growth is a hotly debated issue both in policy and academic circles. In this paper, we provide evidence suggesting that the association between exchange rate misalignment and growth for a broad panel of countries is very weak. Controlling for country fixed effects, time effects and initial GDP, a more depreciated currency is associated with higher growth if one does not exclude outliers. However, this positive association always vanishes after controling for the savings rate. Importantly, this applies for both a large panel of countries and for the emerging economies subsample.
Foreign Exchange --- Money and Monetary Policy --- Monetary Systems --- Standards --- Regimes --- Government and the Monetary System --- Payment Systems --- Currency --- Foreign exchange --- Monetary economics --- Real exchange rates --- Currencies --- Exchange rates --- Money --- United States
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Under the assumption of no arbitrage exchange rate target zone credibility is tested by whether domestic interest rates fall within “rate-of-return bands” between the maximum and minimum home-currency rate of return on a foreign investment absent a devaluation. Under the assumption of uncovered interest rate parity credibility is tested by whether expected future exchange rates fall within the exchange rate band. These tests are applied on data about the Swedish target zone during January 1987-August 1990.
Foreign Exchange --- Investments: General --- Money and Monetary Policy --- Monetary Systems --- Standards --- Regimes --- Government and the Monetary System --- Payment Systems --- Investment --- Capital --- Intangible Capital --- Capacity --- Currency --- Foreign exchange --- Monetary economics --- Macroeconomics --- Money --- National accounts --- Saving and investment --- Sweden
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Un nombre croissant de pays adoptent des régimes de taux de change flexible car la flexibilité assure une meilleure protection contre les chocs externes et donne plus d'indépendance à la politique monétaire. Ailleurs, la transition se fait parfois de façon désordonnée, avec une forte dépréciation de la monnaie lors d'une crise. Quel que soit le motif de l'adoption d'un taux de change flexible, la réussite de la transition dépend de la bonne gestion de plusieurs aspects institutionnels et opérationnels. Les auteurs de ce numéro des Dossiers économiques décrivent les éléments nécessaires pour passer un régime flexible, ainsi que la cadence et l'ordre idéal de ces éléments dans différentes circonstances.
Finance: General --- Foreign Exchange --- Money and Monetary Policy --- International Financial Markets --- Monetary Systems --- Standards --- Regimes --- Government and the Monetary System --- Payment Systems --- Currency --- Foreign exchange --- Finance --- Monetary economics --- Foreign exchange market --- Money --- United Kingdom
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This article uses two analytical methodologies to understand the dynamics of inflation in Paraguay, the mark-up theory of inflation and the monetary theory of inflation. We also study the impact of different monetary aggregates. The results suggest that monetary factors, in particular currency in circulation, play a major role in determining long-run inflation, while foreign prices, in particular from Brazil, or some food products have a large impact on the short-term dynamics of inflation. Wage indexation may also contribute to locking up price increases.
Inflation (Finance) --- Demand for money --- Econometric models. --- Liquidity preference --- Money --- Money supply --- Finance --- Natural rate of unemployment --- Foreign Exchange --- Inflation --- Macroeconomics --- Money and Monetary Policy --- Price Level --- Deflation --- Monetary Systems --- Standards --- Regimes --- Government and the Monetary System --- Payment Systems --- Demand for Money --- Monetary economics --- Currency --- Foreign exchange --- Currencies --- Consumer price indexes --- Exchange rates --- Prices --- Price indexes --- Brazil
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The paper investigates the determinants of foreign currency borrowing by the private sector in the new member states of the European Union. We find that striking differences in patterns of foreign currency borrowing between countries are explained by the loan-to-deposit ratios, openness, and the interest rate differential. Joining the EU appears to have played an important role, by providing direct access to foreign funding, offering hedging opportunities through greater openness, lending credibility to exchange rate regimes, and raising expectations of imminent euro adoption. The empirical evidence suggests that regulatory policies to slow foreign currency borrowing have had only limited success.
Loans, Foreign --- Econometric models. --- Foreign loans --- International loans --- Loans, International --- Loans --- Conditionality (International relations) --- Foreign loan insurance --- Exports and Imports --- Foreign Exchange --- Money and Monetary Policy --- Monetary Systems --- Standards --- Regimes --- Government and the Monetary System --- Payment Systems --- International Lending and Debt Problems --- Monetary economics --- Currency --- Foreign exchange --- International economics --- Currencies --- Exchange rates --- External debt --- Dollarization --- Money --- Debts, External --- Monetary policy --- Czech Republic
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We develop a optimal rules-based interpretation of the 'three pillars macroeconomic policy framework': a combination of a freely floating exchange rate, an explicit target for inflation, and a mechanism than ensures a stable government debt-GDP ratio around a specified long run. We show how such monetary-fiscal rules need to be adjusted to accommodate specific features of emerging market economies. The model takes the form of two-blocs, a DSGE emerging small open economy interacting with the rest of the world and features, in particular, financial frictions It is calibrated using Chile and US data. Alongside the optimal Ramsey policy benchmark, we model the three pillars as simple monetary and fiscal rules including and both domestic and CPI inflation targeting interest rate rules alongside a 'Structural Surplus Fiscal Rule' as followed recently in Chile. A comparison with a fixed exchange rate regime is made. We find that domestic inflation targeting is superior to partially or implicitly (through a CPI inflation target) or fully attempting to stabilizing the exchange rate. Financial frictions require fiscal policy to play a bigger role and lead to an increase in the costs associated with simple rules as opposed to the fully optimal policy.
Finance --- Business & Economics --- Money --- Monetary policy --- Fiscal policy --- Banks and Banking --- Macroeconomics --- Money and Monetary Policy --- Public Finance --- Fiscal Policy --- Macroeconomics: Consumption --- Saving --- Wealth --- Interest Rates: Determination, Term Structure, and Effects --- Monetary Systems --- Standards --- Regimes --- Government and the Monetary System --- Payment Systems --- Monetary economics --- Consumption --- Fiscal rules --- Zero lower bound --- Currencies --- Economics --- Interest rates --- Chile
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Koreas cross border capital flows have tended to respond negatively in global risk-off episodes, resulting in volatility in the foreign exchange market and occasional policy responses in the form of foreign exchange interventions. We study the relationship between Korean capital flows and global volatility up to 2018. The response of capital flows during risk-off episodes have become more muted over time, and occasional safe-haven type flows into Korean bond markets have helped counterbalance the tendency for portfolio investors to leave. We describe these changing patterns and relate them to shifts in Korea’s domestic investor base. We discuss whether they reflect a sustained shift in the sensitivity of Koreas capital flow pressures to global risk-off episodes, and implications for monetary and exchange rate policies.
Capital movements--Korea (South). --- Korea (South). --- Exports and Imports --- Money and Monetary Policy --- International Investment --- Long-term Capital Movements --- Monetary Systems --- Standards --- Regimes --- Government and the Monetary System --- Payment Systems --- International economics --- Monetary economics --- Capital flows --- Foreign currency exposure --- Foreign assets --- Foreign liabilities --- Capital outflows --- Balance of payments --- Money --- External position --- Capital movements --- Investments, Foreign --- Foreign exchange market --- Korea, Republic of
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We develop a theory of money and credit as competing payment instruments, then put it to work in applications. Buyers can use cash or credit, with the former (latter) subject to the inflation tax (transaction costs). Frictions that make the choice of payment method interesting also imply equilibrium price dispersion. We deliver closed-form solutions for money demand. We then show the model can simultaneously account for the price-change facts, cash-credit shares in micro payment data, and money-interest correlations in macro data. We analyze the effects of inflation on welfare, price dispersion and markups. We also describe nonstationary equilibria as self-fulfilling prophecies, which is standard, except here it entails dynamics in the price distribution.
Econometric models. --- Economic forecasting. --- Economics --- Forecasting --- Economic indicators --- Econometrics --- Mathematical models --- Inflation --- Macroeconomics --- Money and Monetary Policy --- Price Level --- Deflation --- Money Supply --- Credit --- Money Multipliers --- Monetary Policy --- Monetary Systems --- Standards --- Regimes --- Government and the Monetary System --- Payment Systems --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Demand for Money --- Monetary economics --- Demand for money --- Currencies --- Sticky prices --- Money --- Prices --- Canada
Listing 1 - 10 of 1904 | << page >> |
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