Download or read book Distribution Costs and Real Exchange Rate Dynamics During Exchange Rate based Stabilization written by Ariel T. Burstein and published by . This book was released on 2001 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Distribution Costs and Real Exchange Rate Dynamics During Exchange rate based stabilizations written by Ariel T. Burstein and published by . This book was released on 2000 with total page 68 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper studies the role played by the distribution sector in shaping the behavior of the real exchange rate during exchange-rate-based-stabilizations. We use data for the U.S. and Argentina to document the importance of distribution margins in retail prices and disaggregated price data to study price dynamics in the aftermath of Argentina's 1991 Convertibility plan. Distribution services require local labor and land so they drive a natural wedge between retail prices in different countries. We study in detail the impact of introducing a distribution sector in an otherwise standard model of exchange-rate-based-stabilizations. We show that this simple extension improves dramatically the ability of the model to rationalize observed real exchange rate dynamics.

Download or read book Distribution Costs and Real Exchange Dynamics During Exchange rate based stabilizations written by A. T. Burstein and published by . This book was released on 2000 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Distribution Costs and Real Exchange Rate Dynamics During Exhange Rate based Stabilization written by Ariel Thomas Burstein and published by . This book was released on 2001 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Distribution Coasts and Real Exange Rate Dynamics During ExcDistribution Costs and Real Exchange Rate Dynamics During Exchange rate based stabilizations written by Ariel T. Burstein and published by . This book was released on 2000 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Real Frictions and Real Exchange Rate Dynamics written by In Huh and published by . This book was released on 2012 with total page 24 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Real Exchange Rate Dynamics with Endogenous Distribution Costs written by Millan L.B Mulraine and published by . This book was released on 2006 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The importance of distribution costs in generating the deviations from the law of one price has been well documented. In this paper we show that a two-country flexible price dynamic general equilibrium model driven by exogenous innovations to technology, and with a localized distribution services sector can replicate the key dynamic features of the real exchange rate. In doing so, the paper identifies the importance of two key channels for real exchange rate dynamics. That is, we show: (i) that shocks in the real sector are important contributors to movements in the real exchange rate, and (ii) that the endogenous wedge created by distribution costs of traded goods is a significant source of fluctuation for the real exchange rate, and the overall macro-economy as a whole. The evidence presented here demonstrates that this model - without any nominal rigidities, can account for up to 89% of the relative volatility in the real exchange rate.

Download or read book Real Frictions and Real Exchange Rate Dynamics written by In Hŏ and published by . This book was released on 2012 with total page 24 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Exchange Rate Based Stabilization written by Mr.A. Javier Hamann and published by International Monetary Fund. This book was released on 1999-10-01 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt: Do exchange-rate-based stabilizations generate distinctive economic dynamics? To address this question, this paper identifies stabilization episodes using criteria that differ from those in previous empirical studies of exchange-rate-based stabilizations. We find that, while some differences can be detected between exchange-rate-based stabilizations and stabilizations where the exchange rate is not the anchor, the behavior of important variables does not appear to differ—especially output growth, which is good in both cases. There is also no evidence that fiscal discipline is enhanced by adopting an exchange-rate anchor, or that there are any systematic differences in the success records of stabilizations that use the exchange rate as a nominal anchor and those that do not.

Download or read book Real Exchange Rates and Inflation in Exchange Rate Based Stabilizations written by Steven B. Kamin and published by . This book was released on 1998 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Considerable research has focused on explaining why currencies appreciate in real terms after the nominal exchange rate is stabilized, but this research generally has taken a theoretical approach, and rarely has tested its hypotheses empirically. In this paper I estimate a simple error-correction model for Mexico, based on the Salter-Swan framework, in which inflation is determined by (1) the gap between the actual real exchange rate and the exchange rate that clears the market for non-traded goods, and (2) persistence effects of past inflation. Using the model, I decompose the excess of Mexican inflation in 1988-94 over peso-adjusted international inflation rates--that is, the real appreciation of the peso--into that part attributable to the initial undervaluation of the peso, that part explained by the subsequent expansion of domestic demand, and that part attributable to inertial inflation. The results indicate that the effects of inertial inflation in appreciating the real exchange rate were quite temporary, lasting only about a year after the stabilization of the peso in 1988. Of the real appreciation that took place between 1988 and 1994, about half was attributable to the expansion of domestic demand--which appreciated the equilibrium real exchange rate in the non-tradeables sector--and about half reflected the correction of the initial undervaluation of the real exchange rate relative to its equilibrium level in the non-tradeables sector. Finally, the paper uses the model to illustrate the impact of various prospective exchange rate policies on inflation and the real exchange rate in Mexico.

Download or read book Expenditure Switching Vs Real Exchange Rate Stabilization written by Michael B. Devereux and published by . This book was released on 2006 with total page 56 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper develops a view of exchange rate policy as a trade-off between the desire to smooth fluctuations in real exchange rates so as to reduce distortions in consumption allocations, and the need to allow flexibility in the nominal exchange rate so as to facilitate terms of trade adjustment. We show that optimal nominal exchange rate volatility will reflect these competing objectives. The key determinants of how much the exchange rate should respond to shocks will depend on the extent and source of price stickiness, the elasticity of substitution between home and foreign goods, and the amount of home bias in production. Quantitatively, we find the optimal exchange rate volatility should be significantly less than would be inferred based solely on terms of trade considerations. Moreover, we find that the relationship between price stickiness and optimal exchange rate volatility may be non-monotonic.

Download or read book Exchange rate based Stabilization Under Imperfect Credibility written by Guillermo A. Calvo and published by . This book was released on 1991 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Exchange Rate Uncertainty in Money Based Stabilization Programs written by Mr.R. Armando Morales and published by International Monetary Fund. This book was released on 1998-01-01 with total page 19 pages. Available in PDF, EPUB and Kindle. Book excerpt: Complementing the explanation provided by Calvo and Vegh (1994) for money-based stabilization programs, exchange rate uncertainty introduced to a particular version of the portfolio approach with imperfect competition in the banking system leads to a bias toward appreciation that is directly related to the divergence of expectations and that dampens the interaction between portfolio movements and the real exchange rate. Based on Frankel-Froot, uncertainty exists when the fundamental equilibrium real exchange rate is temporarily unknown in a foreign exchange market with two types of agents: ‘parity-guessers,’ who expect a jump to a reference parity level, and ‘money-followers,’ who expect nominal depreciation equal to the monetary rule.

Download or read book Exchange Rate Dynamics written by Martin D. D. Evans and published by Princeton University Press. This book was released on 2011-03-14 with total page 561 pages. Available in PDF, EPUB and Kindle. Book excerpt: A comprehensive and in-depth look at exchange-rate dynamics Variations in the foreign exchange market influence all aspects of the world economy, and understanding these dynamics is one of the great challenges of international economics. This book provides a new, comprehensive, and in-depth examination of the standard theories and latest research in exchange-rate economics. Covering a vast swath of theoretical and empirical work, the book explores established theories of exchange-rate determination using macroeconomic fundamentals, and presents unique microbased approaches that combine the insights of microstructure models with the macroeconomic forces driving currency trading. Macroeconomic models have long assumed that agents—households, firms, financial institutions, and central banks—all have the same information about the structure of the economy and therefore hold the same expectations and uncertainties regarding foreign currency returns. Microbased models, however, look at how heterogeneous information influences the trading decisions of agents and becomes embedded in exchange rates. Replicating key features of actual currency markets, these microbased models generate a rich array of empirical predictions concerning trading patterns and exchange-rate dynamics that are strongly supported by data. The models also show how changing macroeconomic conditions exert an influence on short-term exchange-rate dynamics via their impact on currency trading. Designed for graduate courses in international macroeconomics, international finance, and finance, and as a go-to reference for researchers in international economics, Exchange-Rate Dynamics guides readers through a range of literature on exchange-rate determination, offering fresh insights for further reading and research. Comprehensive and in-depth examination of the latest research in exchange-rate economics Outlines theoretical and empirical research across the spectrum of modeling approaches Presents new results on the importance of currency trading in exchange-rate determination Provides new perspectives on long-standing puzzles in exchange-rate economics End-of-chapter questions cement key ideas

Download or read book Non Tradable Goods and the Real Exchange Rate written by Pau Rabanal and published by . This book was released on 2009 with total page 50 pages. Available in PDF, EPUB and Kindle. Book excerpt: How important are nontradable goods and distribution costs to explain real exchange rate dynamics? We answer this question by estimating a general equilibrium model with intermediate and final tradable and nontradable goods. We obtain reasonable estimated parameter values using Bayesian methods, and find that the estimated model can match real exchange rate persistence and, to less extent, volatility. Nontradable sector technology shocks explain about one third of real exchange rate volatility. We present impulse responses to better understand the transmission mechanism of shocks in the open economy. We also show that in order to explain the low correlation between the ratio of relative consumption and the real exchange rates across countries, fiscal policy shocks are necessary in the model, in addition to technology shocks.

Download or read book Exchange Rate Dynamics Under Alternative Intervention Rules written by Fidelina B. Natividad and published by . This book was released on 1988 with total page 28 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Global Commodity Prices Monetary Transmission and Exchange Rate Pass Through in the Pacific Islands written by Mr.Shanaka J. Peiris and published by International Monetary Fund. This book was released on 2012-07-01 with total page 16 pages. Available in PDF, EPUB and Kindle. Book excerpt: Pacific Islands countries are vulnerable to commodity price shocks, and this poses challenges to monetary policy. The high degree of exchange rate pass-through to headline inflation and the weak monetary transmission mechanism in PICs suggest a greater efficacy of exchange rate changes in affecting inflation rather than monetary policy. To assess the tradeoff between the use of the exchange rate and monetary policy in macroeconomic stabilization, we employ a model-based approach to examine the optimal policy in response to the historical distribution of exogenous shocks in a Pacific Island (Tonga). The empirical evidence and model simulations tilt in the favor of exchange rate policy given the close relationship between exchange rate changes and headline inflation and the low interest rate sensitivity of aggregate demand.