The Exchange Rate
... After studying this chapter, you will able to Explain how international trade is financed Describe a country’s balance of payments accounts Explain what determines the amount of international borrowing and lending Explain why the United States changed from being a lender to being a borrower ...
... After studying this chapter, you will able to Explain how international trade is financed Describe a country’s balance of payments accounts Explain what determines the amount of international borrowing and lending Explain why the United States changed from being a lender to being a borrower ...
An interest rate defense of a fixed exchange rate?
... rate have spurred a literature related closely to the present paper.4 At the empirical level, Furman and Stiglitz (1998) find, in a small set of episodes of crises in nine emerging markets, that interest rate hikes are associated with exchange rate depreciations. Kraay (2003), considering a larger s ...
... rate have spurred a literature related closely to the present paper.4 At the empirical level, Furman and Stiglitz (1998) find, in a small set of episodes of crises in nine emerging markets, that interest rate hikes are associated with exchange rate depreciations. Kraay (2003), considering a larger s ...
Management of Capital Flows in India: 1990-2011
... Moreover, these flows, by their very nature, involved risk sharing between foreign investors and their host countries and tended to be more stable than debt flows. We find that the hierarchical nature of the liberalization in India has helped to considerably alter the composition of external liabili ...
... Moreover, these flows, by their very nature, involved risk sharing between foreign investors and their host countries and tended to be more stable than debt flows. We find that the hierarchical nature of the liberalization in India has helped to considerably alter the composition of external liabili ...
Economic Costs of Alternative Monetary Policy Responses During
... unsustainable; (ii) do not attempt to defend the currency and allow the currency to depreciate immediately. The existing literature on currency attacks has shown that the ease with which a currency devaluation can be prevented depends on the economic environment at the time of the attack. Therefore ...
... unsustainable; (ii) do not attempt to defend the currency and allow the currency to depreciate immediately. The existing literature on currency attacks has shown that the ease with which a currency devaluation can be prevented depends on the economic environment at the time of the attack. Therefore ...
Fixed Exchange Rates
... residents own abroad than foreigners earn on their assets owned in the U.S. – Half of the negative U.S. international investment position comes from foreign holdings of international reserves • USD holdings often invested in short-term, low interest Treasuries – U.S. has, in contrast, virtually no f ...
... residents own abroad than foreigners earn on their assets owned in the U.S. – Half of the negative U.S. international investment position comes from foreign holdings of international reserves • USD holdings often invested in short-term, low interest Treasuries – U.S. has, in contrast, virtually no f ...
Chapter 15 Exchange-Rate Systems and currency crises
... caused by • A redefinition of a par value • Changes in an exchange rate • Changes in the supply of or demand for foreign exchange © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a ...
... caused by • A redefinition of a par value • Changes in an exchange rate • Changes in the supply of or demand for foreign exchange © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a ...
Currency Unions, Product Introductions, and the Real Exchange Rate
... of currency units is far more important for defining the boundaries between markets for some goods. Deviations from the LOP are significantly larger for these same products for countries with different currencies, even if their nominal exchange rate (NER) is pegged. For example, prices in the euro z ...
... of currency units is far more important for defining the boundaries between markets for some goods. Deviations from the LOP are significantly larger for these same products for countries with different currencies, even if their nominal exchange rate (NER) is pegged. For example, prices in the euro z ...
ch09
... • The Bretton Woods System was the result of an international monetary conference that took place in 1944 • Three principles guided this system – in ordinary times, exchange rates should be fixed – in extraordinary times, exchange rates should be changed – an institution was needed to watch over the ...
... • The Bretton Woods System was the result of an international monetary conference that took place in 1944 • Three principles guided this system – in ordinary times, exchange rates should be fixed – in extraordinary times, exchange rates should be changed – an institution was needed to watch over the ...
References
... causal variables take time to play out—often significant amounts of time. In the model described here, wages track prices, but only after a distributed lag. Prices change whenever the money supply, aggregate output, or the velocity of circulation of money change, but only after a distributed lag. Si ...
... causal variables take time to play out—often significant amounts of time. In the model described here, wages track prices, but only after a distributed lag. Prices change whenever the money supply, aggregate output, or the velocity of circulation of money change, but only after a distributed lag. Si ...
On the Link between Dollarization and Inflation: Evidence
... additional indicator of the rise in dollarization. This ratio would also capture the financial system’s exposure to systemic risk in the case of large devaluations. Although there was a shift in the composition of loans in favor of foreign exchange loans after the 1994 financial crisis, the share of ...
... additional indicator of the rise in dollarization. This ratio would also capture the financial system’s exposure to systemic risk in the case of large devaluations. Although there was a shift in the composition of loans in favor of foreign exchange loans after the 1994 financial crisis, the share of ...
On the Link between Dollarization and Inflation: Evidence from Turkey* by
... additional indicator of the rise in dollarization. This ratio would also capture the financial system’s exposure to systemic risk in the case of large devaluations. Although there was a shift in the composition of loans in favor of foreign exchange loans after the 1994 financial crisis, the share of ...
... additional indicator of the rise in dollarization. This ratio would also capture the financial system’s exposure to systemic risk in the case of large devaluations. Although there was a shift in the composition of loans in favor of foreign exchange loans after the 1994 financial crisis, the share of ...
The IMF and Danmarks Nationalbank`s Balance Sheet
... lending via a special arrangement, the Poverty Reduction and Growth Facility, PRGF, of kr. 0.6 billion at end-2002 is also stated on the asset side of the balance sheet. Finally, Danmarks Nationalbank's participation in the New Arrangements to Borrow, NAB, is stated1. Under NAB it is possible to dra ...
... lending via a special arrangement, the Poverty Reduction and Growth Facility, PRGF, of kr. 0.6 billion at end-2002 is also stated on the asset side of the balance sheet. Finally, Danmarks Nationalbank's participation in the New Arrangements to Borrow, NAB, is stated1. Under NAB it is possible to dra ...
F inancial dollarization
... these financial vulnerability issues confirms the relevance of this distinction.6 To address some of these issues, we present a model of financial dollarization based on a portfolio selection approach, following contributions by Thomas (1985) and others. However, unlike in the earlier literature, th ...
... these financial vulnerability issues confirms the relevance of this distinction.6 To address some of these issues, we present a model of financial dollarization based on a portfolio selection approach, following contributions by Thomas (1985) and others. However, unlike in the earlier literature, th ...
Mizuho Dealer`s Eye
... 1. Review of the Previous Month As market participants focused on the possibility of a U.S. rate hike within the year, the dollar/yen pair moved with a heavy topside in September on lackluster U.S. economic indicators and concerns of a Chinese economic slowdown. With the FOMC holding off from raisin ...
... 1. Review of the Previous Month As market participants focused on the possibility of a U.S. rate hike within the year, the dollar/yen pair moved with a heavy topside in September on lackluster U.S. economic indicators and concerns of a Chinese economic slowdown. With the FOMC holding off from raisin ...
Working Paper, No. 119 - Wirtschaftswissenschaftliche Fakultät der
... Some may argue that monetary unions in general may reduce the perceived default risk of its member states if investors anticipate that once a member country is in trouble it will be bailed out by other countries or the central bank (Bernoth et al. 2004). With the political commitment and institutio ...
... Some may argue that monetary unions in general may reduce the perceived default risk of its member states if investors anticipate that once a member country is in trouble it will be bailed out by other countries or the central bank (Bernoth et al. 2004). With the political commitment and institutio ...
CHAPTER 12—EXCHANGE-RATE DETERMINATION MULTIPLE
... 17. For the United States, suppose the annual interest rate on government securities equals 8 percent while the annual inflation rate equals 4 percent. For Japan, suppose the annual interest rate on government securities equals 10 percent while the annual inflation rate equals 7 percent. These varia ...
... 17. For the United States, suppose the annual interest rate on government securities equals 8 percent while the annual inflation rate equals 4 percent. For Japan, suppose the annual interest rate on government securities equals 10 percent while the annual inflation rate equals 7 percent. These varia ...
UIP and the Exchange Rate
... • A currency is also an asset, a way to store wealth. The value of a currency tomorrow is not the same as the value of that currency tomorrow set of today. – The spot rate between two currencies is not the same as their forward rate ...
... • A currency is also an asset, a way to store wealth. The value of a currency tomorrow is not the same as the value of that currency tomorrow set of today. – The spot rate between two currencies is not the same as their forward rate ...
Reserve currency
A reserve currency (or anchor currency) is a currency that is held in significant quantities by governments and institutions as part of their foreign exchange reserves. The reserve currency is commonly used in international transactions and often considered a hard currency or safe-haven currency. People who live in a country that issues a reserve currency can purchase imports and borrow across borders more cheaply than people in other nations because they don't need to exchange their currency to do so.By the end of the 20th century, the United States dollar was considered the world's most dominant reserve currency, and the world's need for dollars has allowed the United States government as well as Americans to borrow at lower costs, granting them an advantage in excess of $100 billion per year. However, the U.S. dollar's status as a reserve currency, by increasing in value, hurts U.S. exporters.