midterm exam 3
... How would these two features affect the desirability of using monetary policy to try to counteract a business cycle slowdown? ...
... How would these two features affect the desirability of using monetary policy to try to counteract a business cycle slowdown? ...
Balance of Payments - Eastbourne College Portal
... because it may arise from the strength of the economy, from a change in its exchange rate, or from a weakness of the economy. The country is likely to have surplus if its products are of a high quality, are produced at a low cost and reflect what households and firms at home and abroad want to buy. ...
... because it may arise from the strength of the economy, from a change in its exchange rate, or from a weakness of the economy. The country is likely to have surplus if its products are of a high quality, are produced at a low cost and reflect what households and firms at home and abroad want to buy. ...
Slide 1
... • The theory of optimum currency areas argues that the optimal area for a system of fixed exchange rates, or a common currency, is one that is highly economically integrated. – economic integration means free flows of • goods and services (trade) • financial capital (assets) and physical capital • w ...
... • The theory of optimum currency areas argues that the optimal area for a system of fixed exchange rates, or a common currency, is one that is highly economically integrated. – economic integration means free flows of • goods and services (trade) • financial capital (assets) and physical capital • w ...
davies on argentina
... sets the stage for chosen economic reforms. Therefore, following a brief overview of Argentina’s political history is an outline of the initiatives established to control run away inflation and stabilize prices. Next is a look at the short-lived boom period. Inevitably, ...
... sets the stage for chosen economic reforms. Therefore, following a brief overview of Argentina’s political history is an outline of the initiatives established to control run away inflation and stabilize prices. Next is a look at the short-lived boom period. Inevitably, ...
The effects of the Russian economy and low oil prices on
... • Remittances play a crucial role in making the large merchandise deficits sustainable • Rather low foreign direct investment inflows BUT important capital link in the ...
... • Remittances play a crucial role in making the large merchandise deficits sustainable • Rather low foreign direct investment inflows BUT important capital link in the ...
... and industrial manufactures fell by 15%, as exports of machinery, electrical appliances and ground transport materials were down by 18%. Agricultural manufactures dropped by 3%. The determining factor was weaker demand from Brazil, particularly in the case of industrial manufactures. The decisive el ...
Additional notes on chapter 14
... Dollarization occurs when a country elects to replace its currency with the dollar or another strong currency, and has no locally issued currency. It does not imply harmonization between the two nations monetary systems. For example Ecuador replaced its local currency with U.S. dollar in 2000, witho ...
... Dollarization occurs when a country elects to replace its currency with the dollar or another strong currency, and has no locally issued currency. It does not imply harmonization between the two nations monetary systems. For example Ecuador replaced its local currency with U.S. dollar in 2000, witho ...
Seigniorage as a Source for a Basic Income Guarantee
... of the Fed in seeking to stabilize the banking system in the wake of the cataclysmic events of that year. If the same funds had been put into circulation by an equal dividend to all taxpayers, who would have then had the opportunity to decide whether they wanted to prop up the banks for whatever the ...
... of the Fed in seeking to stabilize the banking system in the wake of the cataclysmic events of that year. If the same funds had been put into circulation by an equal dividend to all taxpayers, who would have then had the opportunity to decide whether they wanted to prop up the banks for whatever the ...
Growth in Peru`s real GDP per head is forecast to slow from an
... export prices over the forecast period. Although declines in fiscal revenue will be partially offset by external lending, the government will be forced to prioritise investment projects. Currency The US dollar was officially adopted as legal tender in March 2000, replacing the former national curren ...
... export prices over the forecast period. Although declines in fiscal revenue will be partially offset by external lending, the government will be forced to prioritise investment projects. Currency The US dollar was officially adopted as legal tender in March 2000, replacing the former national curren ...
International Political Economy
... European and Asian protection, particularly on the part of West Germany and Japan. The result was recovery. MULTILATERAL MANAGEMENT UNDER US LEADERSHIP The system relied upon a mechanism that would, ultimately, undermine confidence in the system, US dollar outflows and deficits. By 1958 the US no lo ...
... European and Asian protection, particularly on the part of West Germany and Japan. The result was recovery. MULTILATERAL MANAGEMENT UNDER US LEADERSHIP The system relied upon a mechanism that would, ultimately, undermine confidence in the system, US dollar outflows and deficits. By 1958 the US no lo ...
Fundamental Flaws in the European Project
... While the loss of exchange rate flexibility for individual countries is part of the common currency construct, exchange rate management of the euro for the EA as a whole was made to fall outside the remit of the European Central Bank (ECB). Nor was the ECB allowed to act as “banker” for the EA in a ...
... While the loss of exchange rate flexibility for individual countries is part of the common currency construct, exchange rate management of the euro for the EA as a whole was made to fall outside the remit of the European Central Bank (ECB). Nor was the ECB allowed to act as “banker” for the EA in a ...
SIMON FRASER UNIVERSITY Department of Economics Econ 345 Prof. Kasa
... 1. A depreciation of the (real) exchange rate increases net exports. 2. Equilibrium in the foreign exchange market predicts that interest rates and exchange rates (defined as the price of foreign currency) are negatively correlated. 3. According to the Balassa-Samuelson theory of real exchange rates, ...
... 1. A depreciation of the (real) exchange rate increases net exports. 2. Equilibrium in the foreign exchange market predicts that interest rates and exchange rates (defined as the price of foreign currency) are negatively correlated. 3. According to the Balassa-Samuelson theory of real exchange rates, ...
WP24
... objectives at the same time. The new system would expand international trade and investment, while also enlarging the capacity of national governments to pursue countercyclical macroeconomic policy and thereby protect societies from the instabilities of free markets. It would also create institution ...
... objectives at the same time. The new system would expand international trade and investment, while also enlarging the capacity of national governments to pursue countercyclical macroeconomic policy and thereby protect societies from the instabilities of free markets. It would also create institution ...
Document
... economy is vulnerable to speculation. A system of managed floating allows the central bank to retain some ability to control the domestic money supply. A world system of fixed exchange rates in which countries peg the prices of their currencies in terms of a reserve currency involves a striking asym ...
... economy is vulnerable to speculation. A system of managed floating allows the central bank to retain some ability to control the domestic money supply. A world system of fixed exchange rates in which countries peg the prices of their currencies in terms of a reserve currency involves a striking asym ...
International Economics PPT
... levels --> inflation means our products are more expensive --> exports fall --> NX falls Contractionary policies lead to lower price levels --> falling prices --> exports increase -> NX rises (suggestion: look to see if the question focuses on interest rates or price levels to determine which view ...
... levels --> inflation means our products are more expensive --> exports fall --> NX falls Contractionary policies lead to lower price levels --> falling prices --> exports increase -> NX rises (suggestion: look to see if the question focuses on interest rates or price levels to determine which view ...
Cost and Benefits of Adopting Euro
... 2.1. Benefits of Monetary Union The most direct and immediate benefits of monetary union are reduced transaction costs and the elimination of exchange-rate uncertainty. This primarily refers to the costs incurred when doing business or conducting an economic transaction, with a different country wit ...
... 2.1. Benefits of Monetary Union The most direct and immediate benefits of monetary union are reduced transaction costs and the elimination of exchange-rate uncertainty. This primarily refers to the costs incurred when doing business or conducting an economic transaction, with a different country wit ...
View full article - Economic Research
... to his title, and an illuminating analysis. I agree with most of Frenkel’s commentary, and will add some of my own. Frenkel begins with an assessment of the assignment problem and Mundeli’s solution to it. The Mundell solution seems to me to be very artificial. If separate monetary and fiscal author ...
... to his title, and an illuminating analysis. I agree with most of Frenkel’s commentary, and will add some of my own. Frenkel begins with an assessment of the assignment problem and Mundeli’s solution to it. The Mundell solution seems to me to be very artificial. If separate monetary and fiscal author ...
Exchange Rate Regimes: Issues & Policy Options
... exchange rate regimes, from a currency board arrangement (Estonia) to floating regimes (Poland and the Czech Republic). Hungary's system, a preannounced crawling peg, had a band of 2.25 percent on either side until May 2004. • Estonia has come close to achieving the EU inflation level with its curre ...
... exchange rate regimes, from a currency board arrangement (Estonia) to floating regimes (Poland and the Czech Republic). Hungary's system, a preannounced crawling peg, had a band of 2.25 percent on either side until May 2004. • Estonia has come close to achieving the EU inflation level with its curre ...
Reflections on Currency Crises Korkut Erturk Department of Economics
... According to the other view, the main cause of the crisis was financial panic that was caused by irrational herd behavior on the part of international investors. Thus, the crisis had little to do with problems in the real economy nor with inconsistent economic policies. The East Asian crisis, if an ...
... According to the other view, the main cause of the crisis was financial panic that was caused by irrational herd behavior on the part of international investors. Thus, the crisis had little to do with problems in the real economy nor with inconsistent economic policies. The East Asian crisis, if an ...
International Finance I
... The ideal currency 1) Must have fixed value with respect to major currencies 2) Must be convertible, so that there are no restrictions on the flow of capital from one country to another 3) Must support independent monetary policy which will ensure that a country can pursue the the best economic poli ...
... The ideal currency 1) Must have fixed value with respect to major currencies 2) Must be convertible, so that there are no restrictions on the flow of capital from one country to another 3) Must support independent monetary policy which will ensure that a country can pursue the the best economic poli ...
3d_Dong He presentation_10 Dec (Bob paper)
... infinitely against the backing of a stagnant stock of gold. This would cause a run on the currency, particularly if the shortterm liabilities were caused by current account deficits ...
... infinitely against the backing of a stagnant stock of gold. This would cause a run on the currency, particularly if the shortterm liabilities were caused by current account deficits ...
Chapter 19 International Experience with Exchange Rate Regimes
... or U.S. assets with the dollars we are paying them to buy foreign goods, then the U.S. central bank must be selling off some of its foreign reserve assets to make up the shortfall in the balance of payments. Not sustainable over a long time, eventually the central bank will deplete its reserves of f ...
... or U.S. assets with the dollars we are paying them to buy foreign goods, then the U.S. central bank must be selling off some of its foreign reserve assets to make up the shortfall in the balance of payments. Not sustainable over a long time, eventually the central bank will deplete its reserves of f ...
The Foreign Currency Market
... a) Assume that the real interest rate in the United States falls to 3.75 percent. (ii) Using a correctly labeled graph of the foreign exchange market for the euro, show how the value of the euro would change relative to the United States dollar in a flexible exchange rate ...
... a) Assume that the real interest rate in the United States falls to 3.75 percent. (ii) Using a correctly labeled graph of the foreign exchange market for the euro, show how the value of the euro would change relative to the United States dollar in a flexible exchange rate ...
Floating exchange rates
... • In an adjustable peg regime, exchange rates are normally fixed, but countries are occasionally allowed to alter their exchange rate. • Under the Bretton Woods system, each country announced a par value for their currency in terms of US dollars – the dollar standard. ...
... • In an adjustable peg regime, exchange rates are normally fixed, but countries are occasionally allowed to alter their exchange rate. • Under the Bretton Woods system, each country announced a par value for their currency in terms of US dollars – the dollar standard. ...
Currency war
Currency war, also known as competitive devaluation, is a condition in international affairs where countries compete against each other to achieve a relatively low exchange rate for their own currency. As the price to buy a country's currency falls so too does the price of exports. Imports to the country become more expensive. So domestic industry, and thus employment, receives a boost in demand from both domestic and foreign markets. However, the price increase for imports can harm citizens' purchasing power. The policy can also trigger retaliatory action by other countries which in turn can lead to a general decline in international trade, harming all countries.Competitive devaluation has been rare through most of history as countries have generally preferred to maintain a high value for their currency. Countries have generally allowed market forces to work, or have participated in systems of managed exchanges rates. An exception occurred when currency war broke out in the 1930s. As countries abandoned the Gold Standard during the Great Depression, they used currency devaluations to stimulate their economies. Since this effectively pushes unemployment overseas, trading partners quickly retaliated with their own devaluations. The period is considered to have been an adverse situation for all concerned, as unpredictable changes in exchange rates reduced overall international trade.According to Guido Mantega, the Brazilian Minister for Finance, a global currency war broke out in 2010. This view was echoed by numerous other government officials and financial journalists from around the world. Other senior policy makers and journalists suggested the phrase ""currency war"" overstated the extent of hostility. With a few exceptions, such as Mantega, even commentators who agreed there had been a currency war in 2010 generally concluded that it had fizzled out by mid-2011.States engaging in possible competitive devaluation since 2010 have used a mix of policy tools, including direct government intervention, the imposition of capital controls, and, indirectly, quantitative easing. While many countries experienced undesirable upward pressure on their exchange rates and took part in the ongoing arguments, the most notable dimension of the 2010–11 episode was the rhetorical conflict between the United States and China over the valuation of the yuan. In January 2013, measures announced by Japan which were expected to devalue its currency sparked concern of a possible second 21st century currency war breaking out, this time with the principal source of tension being not China versus the US, but Japan versus the Eurozone. By late February, concerns of a new outbreak of currency war had been mostly allayed, after the G7 and G20 issued statements committing to avoid competitive devaluation. After the European Central Bank launched a fresh programme of quantitative easing in January 2015, there was once again an intensification of discussion about currency war.