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Essays in International Finance and Macroeconomics

Essays in International Finance and Macroeconomics
Author: Galip K. Ozhan
Publisher:
Total Pages: 125
Release: 2016
Genre: Banks and banking
ISBN:

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This dissertation consists of essays in the intersection of international finance, macroeconomics, and monetary economics. The first essay studies the role of the financial sector in affecting domestic resource allocation and cross-border capital flows. I develop a quantitative, two-country, macroeconomic model in which banks face endogenous and occasionally binding leverage constraints. Banks lend funds to be invested in tradable or non-tradable sector capital and there is international financial integration in the market for bank liabilities. I focus on news about economic fundamentals as the key source of fluctuations. Specifically, in the case of positive news on the valuation of non-traded sector capital that turn out to be incorrect at a later date, the model generates an asymmetric, belief-driven boom-bust cycle that reproduces key features of the recent Eurozone crisis. Bank balance sheets amplify and propagate fluctuations through three channels when leverage constraints bind: First, amplified wealth effects induce jumps in import-demand (demand channel). Second, changes in the value of non-tradable sector assets alter bank lending to tradable sector firms (intra-national spillover channel). Third, domestic and foreign households re-adjust their savings in domestic banks, and capital flows further amplify fluctuations (international spillover channel). A common central bank’s unconventional policies of private asset purchases and liquidity facilities in response to unfulfilled expectations are successful at ameliorating the economic downturn. In the second essay, co-authored with Professor Ghironi, we study the implications of using the volatility of domestic interest rate as a policy instrument in a small open economy. We develop an international macroeconomic model of the interaction between an emerging market economy (EME) and global investors. EME central banker uses time-varying domestic interest rate volatility as a policy tool, and global investors have the opportunity to sell productive capital to the EME producers (FDI), in addition to having the opportunity to invest in one-period international and EME securities. We assess the effectiveness of using domestic interest rate volatility as a policy tool in distinguishing short-term security flows from long-term FDI flows, and identify the trade-offs that are faced in navigating financial strength and price stability. We find that an increase in interest rate volatility can attract FDI inflows while discouraging short-term security inflows, if the economy is subject to low- degree of pricing frictions. However, if prices are highly sticky, there is a co-movement of long-run FDI and short-run security outflows. Moreover, an increase in policy uncertainty induces higher price volatility.


Studies in International Economics and Finance

Studies in International Economics and Finance
Author: Naoyuki Yoshino
Publisher: Springer Nature
Total Pages: 671
Release: 2022-03-30
Genre: Business & Economics
ISBN: 9811670625

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This festschrift volume presents discussions on contemporary issues in international economics and finance. It is aimed to serve as a reference material for researchers. There are two broad sections of the book -- International Macroeconomics and International Finance. The chapters in the International Macroeconomics section discuss critical topics like aggregate level macro model for India with a new Keynesian perspective, balance of payments, service sector exports, foreign exchange constraints for import demands, foreign direct investment and knowledge spill over, the relationship between forex rate fluctuation and investment, Institutional quality-trade openness-economic growth nexus, currency crises and debt-deficit relationship in the BRICS countries in the backdrop of COVID-19. Apart from these, various analytical issues related to macroeconomic policies are also covered in this section. The topics discussed includes the nature of forex market interventions, the issue of disinvestment and privatization, changing nature of fiscal policy, the inflation-growth nexus, macroeconomic simulation modelling, measuring core inflation, central bank credibility, monetary policy, inflation targeting, Infrastructure, trade, unemployment and inequality nexus. In the International Finance section, topics such as COVID-19 induced financial crisis, commodity futures volatility, stock market connectivity, volatility persistence, determinants of sovereign bond yields, FII and stock market volatility, cryptocurrency price formation, financialization of Indian commodity market, and a Keynesian view of the financial crisis are discussed. Overall, thirty two chapters in the volume discuss cutting edge research in the areas of the two sections. A tour de force... a lucid guide to some of the diverse and complex issues in International Macroeconomics and Finance. This collection of scholarly works is a fitting tribute to respected Prof. Bandi Kamaiah and his enviable academic contributions. - Prof. Y V Reddy, Former Governor, Reserve Bank of India This volume comprising thoughtful essays by our leading scholars on some of important policy issues that India is facing is indeed a rich tribute to Professor Bandi Kamaiah . This book will greatly benefit the academic community as well as our policy makers. - Prof. Vijay Kelkar, Chairman, 13th Finance Commission of India; Chairman, India Development Foundation, Mumbai, India Noted economists from India and abroad gather to apply the rigorous searchlight that Professor Bandi Kamaiah used so effectively in his career. Major current topics in macroeconomics and international finance are effectively explored in the volume. - Prof. Ashima Goyal, Emeritus Professor, Indira Gandhi Institute of Development Research, Mumbai, India; and Member, Monetary Policy Committee of Reserve Bank of India This volume of 32 papers in macroeconomics, international economics, and international finance is intended as a tribute to the eminent econometrician , Prof B Kamaiah. Post-graduate students and researchers will find much valuable literature in the volume, which is a fitting tribute to Prof Kamaiah. The editors and authors deserve rich compliments. - Prof. K L Krishna, Former Director, Delhi School of Economics, New Delhi, India I am so happy to hear that Dr. Kamaiah's colleagues and ex-students are bringing out a special volume of articles in his honor. Nothing can be more appropriate. Dr. Kamaiah, being a man of tremendous publications, deserves this tribute. I wish all the luck and success to the new book. - Prof. Kishore Kulkarni, Distinguished Professor of Economics, Metropolitan State University of Denver, USA


Essays in International Finance and Macroeconomics

Essays in International Finance and Macroeconomics
Author: Eiji Fujii
Publisher:
Total Pages: 242
Release: 1999
Genre: International finance
ISBN:

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Each of the three essays composing this dissertation investigates important economic and econometric issues in international finance and macroeconomics. The first essay, “Market Structure and the Persistence of Sectoral Deviations from Purchasing Power Parity,” examines the relationship between market structure and the persistence of the dollar-based sectoral real exchange rates for fourteen OECD countries. The empirical results based on disaggregated data suggest that differences in market structure significantly determine the rates at which deviations from sectoral purchasing power parity decay. Based on the findings, I argue that an imperfectly competitive market structure is an important source of the well-documented persistence in real exchange rates.


Essays in Macroeconomics and International Finance

Essays in Macroeconomics and International Finance
Author: Louphou Coulibaly
Publisher:
Total Pages:
Release: 2019
Genre:
ISBN:

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How can we best design macroeconomic policies to reduce financial fragility and improve social welfare? My research develops normative theories and uses quantitative analysis to improve our understanding of the potential benefits and welfare implications from regulatory measures in face of excessive risk taking in financial markets. This thesis is a collection of three essays in macroeconomics and international finance that helps guide the debate on the optimal design of macroeconomic and macro-prudential policies ahead of potential financial crises and during crises. The first chapter is a general introduction, while the remaining chapters form the core of the thesis. The second chapter studies the optimal design of financial safety nets. It shows that, in an economy where the government lacks commitment, an optimally designed financial safety net should cover only a subset of investors. An important result that can rationalize the prevalent limited coverage of safety nets, such as the lender of last resort facilities. The third chapter focuses on monetary policy in emerging market economies. This chapter first proposes a theory of why monetary policy is pro-cyclical in emerging economies. It shows that pro-cyclical monetary policy is in fact an optimal policy in an economy subject to the risk of financial crises associated with sudden stops of international capital inflows, and in which the government lacks commitment. The quantitative analysis then shows that macro-prudential policies in the form of capital controls have radical implications for the conduct of monetary policy, and are very effective at reducing both the occurrence and magnitude of financial crises. Finally, the fourth chapter design and analyze the effectiveness of country-specific macroprudential regulations as a macroeconomic stabilization tool in currency unions. The analysis lends support to the view that country-specific macroprudential policies should be set by a union-wide centralized authority, rather than at the national level.


Macroeconomic Analysis and International Finance

Macroeconomic Analysis and International Finance
Author: Georgios P. Kouretas
Publisher: Emerald Group Publishing
Total Pages: 285
Release: 2014-02-20
Genre: Business & Economics
ISBN: 178350756X

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Banking sector transformation, economic growth and inequality and exchange rate arrangements are critical issues whose importance has been highlighted during the recent financial crisis. This volume contains new research on the relationships between economic growth, inequality and the financial sector.