Download or read book Macro Hedging for Commodity Exporters written by Mr.Damiano Sandri and published by International Monetary Fund. This book was released on 2009-10-01 with total page 31 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper uses a dynamic optimization model to estimate the welfare gains of hedging against commodity price risk for commodity-exporting countries. The introduction of hedging instruments such as futures and options enhances domestic welfare through two channels. First, by reducing export income volatility and allowing for a smoother consumption path. Second, by reducing the country's need to hold foreign assets as precautionary savings (or by improving the country's ability to borrow against future export income). Under plausibly calibrated parameters, the second channel may lead to much larger welfare gains, amounting to several percentage points of annual consumption.
Download or read book Macro Hedging for Commodity Exporters written by and published by . This book was released on 2009 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book IMF Working Papers written by Damiano Sandri and published by . This book was released on 2009 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Hedging Macro Risks of Commodity Dependent Economies written by Yifan Ma and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Commodity price fluctuations can exert a large impact on macroeconomic fundamentals in commodity-dependent economies. We document a large heterogeneity in country-specific commodity price, inflation, trade values and foreign exchange risks among 119 commodity exporters and importers. We propose that such diverse macroeconomic risks can be hedged using commodity futures contracts. We find that a small set of futures traded on major international exchanges are sufficient only for hedging pure commodity price risks. For many countries, the addition of contracts traded on more local national exchanges is crucial for hedging their macroeconomic risks. The hedging is more effective in countries where export/import depends less on agriculture, more on energy, and where country-specific local commodity prices correlate more with the global ones. Contrary to conventional wisdom, inflation risk can only be hedged in a relatively small number of countries.
Download or read book Commodity Shocks and Exchange Rate Regimes Implications for the Caribbean Commodity Exporters written by International Monetary Fund and published by International Monetary Fund. This book was released on 2021-04-23 with total page 53 pages. Available in PDF, EPUB and Kindle. Book excerpt: Declining commodity prices during mid-2014-2016 posed significant challenges to commodity-exporting economies. The severe terms of trade shock associated with a sharp fall in world commodity prices have raised anew questions about the viability of pegged exchange rate regimes. More recently, the COVID-19 pandemic and the measures needed to contain its spread have been associated with a significant disruption in several economic sectors, in particular, travel, tourism, and hospitality industry, adding to the downward pressure on commodity prices, a sharp fall in foreign exchange earnings, and depressed economic activity in most commodity exporters. This paper reviews country experiences with different exchange rate regimes in coping with commodity price shocks and explores the role of flexible exchange rates as a shock absorber, analyzing the macroeconomic impact of adverse term-of-trade shocks under different regimes using event study and panel vector autoregression techniques. It also analyzes, conceptually and empirically, policy and technical considerations in making exchange rate regime choices and discusses the supporting policies that should accompany a given regime choice to make that choice sustainable. It offers lessons that could be helpful to the Caribbean commodity-exporters.
Download or read book Macro hedging for Commodity Exporters written by Eduardo Borensztein and published by . This book was released on 2009 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper uses a dynamic optimization model to estimate the welfare gains of hedging against commodity price risk for commodity-exporting countries. The introduction of hedging instruments such as futures and options enhances domestic welfare through two channels. First, by reducing export income volatility and allowing for a smoother consumption path. Second, by reducing the country's need to hold foreign assets as precautionary savings (or by improving the country's ability to borrow against future export income). Under plausibly calibrated parameters, the second channel may lead to much larger welfare gains, amounting to several percentage points of annual consumption.
Download or read book Macro hending for Commodity Exporters written by Eduardo Borensztein and published by . This book was released on 2009 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Does What You Export Matter written by Daniel Lederman and published by World Bank Publications. This book was released on 2012-06-18 with total page 153 pages. Available in PDF, EPUB and Kindle. Book excerpt: Does what economies export matter for development? If so, can industrial policies improve on the export basket generated by the market? This book approaches these questions from a variety of conceptual and policy viewpoints. Reviewing the theoretical arguments in favor of industrial policies, the authors first ask whether existing indicators allow policy makers to identify growth-promoting sectors with confidence. To this end, they assess, and ultimately cast doubt upon, the reliability of many popular indicators advocated by proponents of industrial policy. Second, and central to their critique, the authors document extraordinary differences in the performance of countries exporting seemingly identical products, be they natural resources or 'high-tech' goods. Further, they argue that globalization has so fragmented the production process that even talking about exported goods as opposed to tasks may be misleading. Reviewing evidence from history and from around the world, the authors conclude that policy makers should focus less on what is produced, and more on how it is produced. They analyze alternative approaches to picking winners but conclude by favoring 'horizontal-ish' policies--for instance, those that build human capital or foment innovation in existing and future products—that only incidentally favor some sectors over others.
Download or read book Commodity Price Shocks and Fiscal Outcomes written by Mr.Nicola Spatafora and published by International Monetary Fund. This book was released on 2012-05-01 with total page 75 pages. Available in PDF, EPUB and Kindle. Book excerpt: The experience of developing countries over 1990-2010 indicates that commodity prices have a significant impact on fiscal outcomes. Both revenue and expenditure rise in response to commodity (import or export) price increases; the response of the fiscal deficit is ambiguous. A floating exchange rate regime only partially offsets the impact; foreign-exchange reserves do not dampen the effects. Hence, there is a strong case for fiscal hedging against commodity price shocks. Hedging instruments based on a limited set of benchmark world prices for a narrow set of commodities may suffice to realize most of the potential benefits.
Download or read book Oil Exporters Dilemma written by Reda Cherif and published by International Monetary Fund. This book was released on 2012-01-01 with total page 24 pages. Available in PDF, EPUB and Kindle. Book excerpt: Policymakers in oil-exporting countries confront the question of how to allocate oil revenues among consumption, saving, and investment in the face of high income volatility. We study this allocation problem in a precautionary saving and investment model under uncertainty. Consistent with data in the 2000s, precautionary saving is sizable and the marginal propensity to consume out of permanent shocks is below one, in stark contrast to the predictions of the perfect foresight model. The optimal investment rate is high if productivity in the tradable sector is high enough.
Download or read book Currencies Commodities and Consumption written by Kenneth W. Clements and published by Cambridge University Press. This book was released on 2013-01-31 with total page 401 pages. Available in PDF, EPUB and Kindle. Book excerpt: Discusses economic issues associated with exchange rates, commodity prices, the economic size of countries and alternatives to PPP exchange rates.
Download or read book Boom and Bust Again written by David L. Ryan and published by University of Alberta. This book was released on 2013-09-10 with total page 373 pages. Available in PDF, EPUB and Kindle. Book excerpt: In many commodity-based economies, rollercoaster boom-and-bust cycles have come to be viewed almost as an unavoidable characteristic. Framed mainly in the context of the Alberta economy, the articles in this volume explore a wide range of issues associated with the historical phenomenon of recurring periods of boom and bust, including reasons for their apparent inevitability, dealing with revenue volatility, possible diversification strategies, savings policy, and challenges faced by policy makers. Re-examining and shedding new light on these struggles, Boom and Bust Again is an important contribution to the literature on policy issues for readers in the fields of economics, business, finance, and public policy. Contributors: Robert L. Ascah, Jason Brisbois, Colin Busby, Edward J. Chambers, Bev Dahlby, Stephen Duckett, J. C. Herbert Emery, Nicholas Emter, Roger Gibbins, Brad R. Humphreys, Ronald Kneebone, Gordon Kramer, Stuart Landon, Kathleen Macaspac, Victor A. Matheson, Melville McMillan, John D. Murray, Alice O. Nakamura, Al O'Brien, David L. Ryan, Liesje Sarnecki, Constance Smith.
Download or read book Sovereign Wealth Funds written by Christopher Balding and published by Oxford University Press, USA. This book was released on 2012 with total page 232 pages. Available in PDF, EPUB and Kindle. Book excerpt: Sovereign wealth funds are a growing and dynamic force in international finance. This is the first book to compile a history of sovereign wealth funds, recounting the Abu Dhabi Investment Authority's involvement with the scandal-plagued BCCI bank and Chinese arms exports to Iran. In a straightforward and accessible style, the author examines the complex and amazing growth of an unknown group of investors controlling trillions of dollars worldwide.
Download or read book Assessing Reserve Adequacy written by International Monetary Fund and published by International Monetary Fund. This book was released on 2011-02-14 with total page 50 pages. Available in PDF, EPUB and Kindle. Book excerpt: The dramatic increase in reserves holdings over the past decade has resumed since the global financial crisis, even at an accelerated pace. While the crisis has heightened perceptions of the importance of holding adequate reserves, there is little consensus on what constitutes an adequate level from a precautionary perspective: traditional metrics are narrowly-based and often provide conflicting signals; while newer approaches tend to be hostage to stylized modeling assumptions and calibrations. As a result, assessments tend to rely on comparisons with peers, probably amplifying the upward trend as perceived needs rise in line with actual holdings.
Download or read book Commodity Prices and Markets written by Takatoshi Ito and published by University of Chicago Press. This book was released on 2011-02-15 with total page 346 pages. Available in PDF, EPUB and Kindle. Book excerpt: Fluctuations of commodity prices, most notably of oil, capture considerable attention and have been tied to important economic effects, such as inflation and low rates of economic growth. Commodity Prices and Markets advances our understanding of the consequences of these fluctuations, providing both general analysis and a particular focus on the countries of the Pacific Rim. The volume addresses three distinct subjects: the difficulties in forecasting commodity prices, the effects of exogenous commodity price shocks on the domestic economy, and the relationship between price shocks and monetary policy. The ability to forecast commodity prices is difficult but of great importance to businesses and governments, and this volume will be invaluable to professionals and policy makers interested in the field.
Download or read book Welfare Gains from Market Insurance The Case of Mexican Oil Price Risk written by Chang Ma and published by International Monetary Fund. This book was released on 2018-03-02 with total page 39 pages. Available in PDF, EPUB and Kindle. Book excerpt: Over the past two decades, Mexico has hedged oil price risk through the purchase of put options. We examine the resulting welfare gains using a standard sovereign default model calibrated to Mexican data. We show that hedging increases welfare by reducing income volatility and reducing risk spreads on sovereign debt. We find welfare gains equivalent to a permanent increase in consumption of 0.44 percent with 90 percent of these gains stemming from lower risk spreads.
Download or read book The Volatility Trap written by Reda Cherif and published by International Monetary Fund. This book was released on 2012-05-01 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study the effects of permanent and temporary income shocks on precautionary saving and investment in a "store-or-sow" model of growth. High volatility of permanent shocks results in high precautionary saving in the safe asset and low investment, or a "volatility trap." Namely, big savers invest relatively little. In contrast, low volatility of permanent shocks leads to low precautionary saving and high or low investment, depending on the volatility of temporary shocks. Empirical evidence shows a nonlinear relationship between investment and saving and that investment is a hump-shaped function of the volatility of permanent shocks, as predicted by the model.
