Download or read book Effects of Asymmetric Demand Shocks in a Fixed Exchange Rate Two country Model written by and published by . This book was released on 1992 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Real Exchange Rate Effects of Monetary Shocks Under Fixed and Flexible Exchange Rates written by Reuven Glick and published by . This book was released on 1987 with total page 100 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book A Two country Model with Asymmetric Phillips Curves and Intervention in the Foreign Exchange Market written by Michael J. Artis and published by . This book was released on 1987 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book A Model of an Optimum Currency Area written by Mr.Luca Antonio Ricci and published by International Monetary Fund. This book was released on 1997-06-01 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates the circumstances under which it is beneficial to participate in a currency area. A two-country monetary model of trade with nominal rigidities encompasses the real and monetary arguments suggested by the optimum currency area literature: correlation of real shocks, international factor mobility, fiscal adjustment, openness, difference in national inflationary biases, correlation of monetary shocks, and benefits of a single currency. The effect of openness on the net benefits is ambiguous, contrary to the usual argument that more open economies are better candidates for a currency area. Countries do not necessarily agree on whether a given currency union should be created.
Download or read book A Simple Dynamic General Equilibrium Model of the Trade off Between Fixed and Floating Exchange Rates written by Michael B. Devereux and published by . This book was released on 2000 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book The Asymmetric Effects of Exchange Rate Fluctuations written by Magda Kandil and published by International Monetary Fund. This book was released on 2000 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Flexible Exchange Rates as Shock Absorbers written by Sebastian Edwards and published by . This book was released on 2003 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this paper we analyze empirically the effect of terms of trade shocks on economic performance under alternative exchange rate regimes. We are particularly interested in investigating whether terms of trade disturbances have a smaller effect on growth in countries with a flexible exchange rate regime, than in countries with a more rigid exchange rate arrangement. We also analyze whether negative and positive terms of trade shocks have asymmetric effects on growth, and whether the magnitude of these asymmetries depends on the exchange rate regime. We find evidence suggesting that terms of trade shocks get amplified in countries that have more rigid exchange rate regimes. We also find evidence of an asymmetric response to terms of trade shocks: the output response is larger for negative than for positive shocks. Finally, we find evidence supporting the view that, after controlling for other factors, countries with more flexible exchange rate regimes grow faster than countries with fixed exchange rates.
Download or read book Dominant Currency Paradigm A New Model for Small Open Economies written by Camila Casas and published by International Monetary Fund. This book was released on 2017-11-22 with total page 62 pages. Available in PDF, EPUB and Kindle. Book excerpt: Most trade is invoiced in very few currencies. Despite this, the Mundell-Fleming benchmark and its variants focus on pricing in the producer’s currency or in local currency. We model instead a ‘dominant currency paradigm’ for small open economies characterized by three features: pricing in a dominant currency; pricing complementarities, and imported input use in production. Under this paradigm: (a) the terms-of-trade is stable; (b) dominant currency exchange rate pass-through into export and import prices is high regardless of destination or origin of goods; (c) exchange rate pass-through of non-dominant currencies is small; (d) expenditure switching occurs mostly via imports, driven by the dollar exchange rate while exports respond weakly, if at all; (e) strengthening of the dominant currency relative to non-dominant ones can negatively impact global trade; (f) optimal monetary policy targets deviations from the law of one price arising from dominant currency fluctuations, in addition to the inflation and output gap. Using data from Colombia we document strong support for the dominant currency paradigm.
Download or read book On the Empirical Relevance of the Exchange Rate as a Shock Absorber at the Zero Lower Bound written by David Finck and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The open economy New Keynesian model with flexible exchange rates postulates that the real exchange rate appreciates in response to an asymmetric negative demand shock in a zero lower bound (ZLB) scenario and exacerbates the adverse macroeconomic effects. However, when monetary policy is able to accommodate the adverse effects of the negative demand shock via unconventional measures, the model can generate a real depreciation at the ZLB. This paper examines these counteracting exchange rate channels empirically. We estimate the effect of a negative asymmetric demand shock on the real exchange rate and inflation expectations as well as output and prices by employing state-dependent and sign-restricted local projection methods for the euro area vis-Ã -vis the United States, Canada, and Japan. We find that the real exchange rate depreciates when interest rates are not at the ZLB but also when they are. Furthermore, our empirical results show that the real exchange rate can absor considerable variations in output, confirming its shock-absorbing capacity before but also during the ZLB episode. The stabilizing role of the exchange rate is accompanied by a significant expansion of the ECBs balance sheet in the ZLB period, while it remained unaffected in the pre-ZLB period. Overall, our empirical results favor the open economy New Keynesian model with unconventional measures when interest rates are at the ZLB.
Download or read book Does Exchange Rate Risk Matter for Welfare written by Paul R. Bergin and published by . This book was released on 2003 with total page 50 pages. Available in PDF, EPUB and Kindle. Book excerpt: Volatility in exchange rates is a prominent feature of open economies, a fact which has motivated elaborate attempts in many countries at exchange rate management. This paper analyzes quantitatively the welfare effects of exchange rate risk in a general two-country environment. It finds that the effects of uncertainty tend to be small for the types of simplified cases considered in past literature. But it identifies other cases, not considered previously, in which these effects can be significantly larger. These include habit persistence, where agents are more sensitive to risk, and also incomplete asset market structures which allow for asymmetries between countries. The latter case suggests that countries which are hosts to an international reserve currency, such as the U.S. or members of the euro zone, may accrue.
Download or read book The Asymmetric Effects of Exchange Rate Fluctuations written by Ms.Magda E. Kandil and published by INTERNATIONAL MONETARY FUND. This book was released on 2000-11-01 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt: The paper examines the asymmetric effects of exchange rate fluctuations on real output and price in developing countries. The theoretical model decomposes movements in the exchange rate into anticipated and unanticipated components. Unanticipated currency fluctuations determine aggregate demand through exports, imports, and the demand for domestic currency, and determine aggregate supply through the cost of imported intermediate goods. The evidence indicates that the supply channel leads to output contraction and price inflation in the face of unanticipated currency depreciation. In contrast, the reduction in net exports determines output contraction without reducing price inflation in the face of unanticipated currency appreciation.
Download or read book The Relative Importance of Symmetric and Asymmetric Shocks written by Gert Peersman and published by . This book was released on 2011 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We show how a simple model with sign restrictions can be used to identify symmetric and asymmetric supply, demand and monetary policy shocks in an estimated two-country structural VAR for the UK and Euro area. The results can be used to deal with several issues that are relevant in the optimal currency area literature. We find an important role for symmetric shocks in explaining the variability of the business cycle in both economies. However, the relative importance of asymmetric shocks, being around 20% in the long run, cannot be ignored. Moreover, when we estimate the model for the UK and US, the degree of business cycle synchronization seems to be higher. Finally, we confirm existing evidence of the exchange rate being an independent source of shocks in the economy.
Download or read book Hysteresis and Business Cycles written by Ms.Valerie Cerra and published by International Monetary Fund. This book was released on 2020-05-29 with total page 50 pages. Available in PDF, EPUB and Kindle. Book excerpt: Traditionally, economic growth and business cycles have been treated independently. However, the dependence of GDP levels on its history of shocks, what economists refer to as “hysteresis,” argues for unifying the analysis of growth and cycles. In this paper, we review the recent empirical and theoretical literature that motivate this paradigm shift. The renewed interest in hysteresis has been sparked by the persistence of the Global Financial Crisis and fears of a slow recovery from the Covid-19 crisis. The findings of the recent literature have far-reaching conceptual and policy implications. In recessions, monetary and fiscal policies need to be more active to avoid the permanent scars of a downturn. And in good times, running a high-pressure economy could have permanent positive effects.
Download or read book The Economics of Monetary Integration written by Paul de Grauwe and published by Oxford University Press, USA. This book was released on 1994 with total page 252 pages. Available in PDF, EPUB and Kindle. Book excerpt: This Revised Second Edition covers recent events in the EMS, including the collapse of the ERM; includes fully updated empirical evidence; includes discussion of new theoretical developments such as target zone models and credibility testing; and introduces the political issues surrounding the move to monetary union. This popular textbook on monetary integration has now been fully revised and updated with expanded chapters on recent important events in the EMS, new empirical evidence, and coverage of further theoretical developments. This lucid and authoritative view will remain an invaluable undergraduate textbook. Professor De Grauwe focuses on the economic theory of monetary union, presents the costs and benefits of moving to a single currency, and provides a detailed presentation of the monetary system operating in Europe. This second edition introduces the student to the political issues surrounding monetary union, and Professor De Grauwe offers a critical analysis of the possibility of eventual European transition to full monetary union.
Download or read book Pass through Exposure written by Gordon M. Bodnar and published by . This book was released on 1999 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book International Dimensions of Monetary Policy written by Jordi Galí and published by University of Chicago Press. This book was released on 2010-03-15 with total page 663 pages. Available in PDF, EPUB and Kindle. Book excerpt: United States monetary policy has traditionally been modeled under the assumption that the domestic economy is immune to international factors and exogenous shocks. Such an assumption is increasingly unrealistic in the age of integrated capital markets, tightened links between national economies, and reduced trading costs. International Dimensions of Monetary Policy brings together fresh research to address the repercussions of the continuing evolution toward globalization for the conduct of monetary policy. In this comprehensive book, the authors examine the real and potential effects of increased openness and exposure to international economic dynamics from a variety of perspectives. Their findings reveal that central banks continue to influence decisively domestic economic outcomes—even inflation—suggesting that international factors may have a limited role in national performance. International Dimensions of Monetary Policy will lead the way in analyzing monetary policy measures in complex economies.
Download or read book Exchange Rate Volatility and Trade Flows Some New Evidence written by International Monetary Fund and published by International Monetary Fund. This book was released on 2004-05-19 with total page 132 pages. Available in PDF, EPUB and Kindle. Book excerpt: NULL
