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Author | : Mr.Vladimir Klyuev |
Publisher | : International Monetary Fund |
Total Pages | : 37 |
Release | : 2003-06-01 |
Genre | : Business & Economics |
ISBN | : 1451855516 |
Download The Distributional Consequences of Real Exchange Rate Adjustment Book in PDF, ePub and Kindle
The paper focuses on distributional consequences of macroeconomic adjustment. The preferences of economic agents over the level of the real exchange rate derived from standard models are monotonic, with agents favoring either an infinitely appreciated or depreciated rate. To generate less extreme preferences, a model is presented where appreciation would depress economic activity, while a large depreciation would hit the tradable sector by limiting the availability of labor, offsetting the favorable price effect. The model is in the spirit of the dependent economy model, but built on explicit microfoundations. The results can be used to analyze political economy aspects of macroeconomic adjustment.
Author | : Chief Economist Latin America and Caribbean Region Sebastian Edwards |
Publisher | : |
Total Pages | : 0 |
Release | : 1989-08-04 |
Genre | : |
ISBN | : 9780262519014 |
Download Real Exchange Rates, Devaluation, and Adjustment Book in PDF, ePub and Kindle
Real Exchange Rates, Devaluation, and Adjustment provides a unified theoretical and empirical investigation of exchange rate policy and performance in scores of developing countries. It develops a theory of equilibrium and disequilibrium real exchange rates, takes up the question of why devaluations are the most controversial policy measures in poorer nations, and discusses what determines their success or failure. In a lucid fashion, Edwards organizes vast amounts of data on exchange rates - both real and nominal - and discusses their effect on net trade balances, net asset positions, output growth, real wages, and rates of price inflation, analyzed both in time series and through cross country comparisons. Edwards's investigation singles out 39 major devaluation episodes for before and after comparative analyses while simultaneously isolating the separate effects of other important explanatory variables, such as bank credit expansion and changes in the terms of trade. The first part of the book focuses on theoretical models of devaluation and real exchange rate behavior in less developed countries. Special attention is paid to intertemporal channels in the transmission of disturbances. The second part uses a large cross country data set to analyze the way the real exchange rate has behaved in these nations. The data are also used to test the implications of several theories of real exchange rate determination. The third part analyzes actual devaluation experiences between 1962 and 1982. These chapters examine the events leading to a balance of payments crisis and to a devaluation, exploring the relation between macroeconomic disequilibrium, and the imposition of trade and exchange controls. They also investigate the effect of nominal devaluation on key variables such as the balance of payments, the current account, the real exchange rate, real output real wages, and income distribution.
Author | : Sebastian Edwards |
Publisher | : |
Total Pages | : 394 |
Release | : 1989 |
Genre | : Devaluation of currency |
ISBN | : |
Download Real Exchange Rates, Devaluation, and Adjustment Book in PDF, ePub and Kindle
Real Exchange Rates, Devaluation, and Adjustment provides a unified theoretical and empirical investigation of exchange rate policy and performance in scores of developing countries. It develops a theory of equilibrium and disequilibrium real exchange rates, takes up the question of why devaluations are the most controversial policy measures in poorer nations, and discusses what determines their success or failure. In a lucid fashion, Edwards organizes vast amounts of data on exchange rates - both real and nominal - and discusses their effect on net trade balances, net asset positions, output growth, real wages, and rates of price inflation, analyzed both in time series and through cross country comparisons. Edwards's investigation singles out 39 major devaluation episodes for before and after comparative analyses while simultaneously isolating the separate effects of other important explanatory variables, such as bank credit expansion and changes in the terms of trade. The first part of the book focuses on theoretical models of devaluation and real exchange rate behavior in less developed countries. Special attention is paid to intertemporal channels in the transmission of disturbances. The second part uses a large cross country data set to analyze the way the real exchange rate has behaved in these nations. The data are also used to test the implications of several theories of real exchange rate determination. The third part analyzes actual devaluation experiences between 1962 and 1982. These chapters examine the events leading to a balance of payments crisis and to a devaluation, exploring the relation between macroeconomic disequilibrium, and the imposition of trade and exchange controls. They also investigate the effect of nominal devaluation on key variables such as the balance of payments, the current account, the real exchange rate, real output real wages, and income distribution.
Author | : Ariel T. Burstein |
Publisher | : |
Total Pages | : 42 |
Release | : 2001 |
Genre | : Economic stabilization |
ISBN | : |
Download Distribution Costs and Real Exchange Rate Dynamics During Exchange Rate-based Stabilization Book in PDF, ePub and Kindle
Author | : Vladimir Klyuev |
Publisher | : |
Total Pages | : 44 |
Release | : 2003 |
Genre | : Currency convertibility |
ISBN | : |
Download The Distributional Consequences of Real Exchange Rate Adjustment Book in PDF, ePub and Kindle
Author | : Romain Lafarguette |
Publisher | : International Monetary Fund |
Total Pages | : 33 |
Release | : 2021-02-12 |
Genre | : Business & Economics |
ISBN | : 1513569406 |
Download Foreign Exchange Intervention Rules for Central Banks: A Risk-based Framework Book in PDF, ePub and Kindle
This paper presents a rule for foreign exchange interventions (FXI), designed to preserve financial stability in floating exchange rate arrangements. The FXI rule addresses a market failure: the absence of hedging solution for tail exchange rate risk in the market (i.e. high volatility). Market impairment or overshoot of exchange rate between two equilibria could generate high volatility and threaten financial stability due to unhedged exposure to exchange rate risk in the economy. The rule uses the concept of Value at Risk (VaR) to define FXI triggers. While it provides to the market a hedge against tail risk, the rule allows the exchange rate to smoothly adjust to new equilibria. In addition, the rule is budget neutral over the medium term, encourages a prudent risk management in the market, and is more resilient to speculative attacks than other rules, such as fixed-volatility rules. The empirical methodology is backtested on Banco Mexico’s FXIs data between 2008 and 2016.
Author | : Steve Brito |
Publisher | : International Monetary Fund |
Total Pages | : 21 |
Release | : 2018-05-10 |
Genre | : Business & Economics |
ISBN | : 1484356349 |
Download Real Exchange Rates, Economic Complexity, and Investment Book in PDF, ePub and Kindle
We show that the response of firm-level investment to real exchange rate movements varies depending on the production structure of the economy. Firms in advanced economies and in emerging Asia increase investment when the domestic currency weakens, in line with the traditional Mundell-Fleming model. However, in other emerging market and developing economies, as well as some advanced economies with a low degree of structural economic complexity, corporate investment increases when the domestic currency strengthens. This result is consistent with Diaz Alejandro (1963)—in economies where capital goods are mostly imported, a stronger real exchange rate reduces investment costs for domestic firms.
Author | : Mr.Marco Airaudo |
Publisher | : International Monetary Fund |
Total Pages | : 65 |
Release | : 2016-03-08 |
Genre | : Business & Economics |
ISBN | : 1475523165 |
Download Inflation Targeting and Exchange Rate Management In Less Developed Countries Book in PDF, ePub and Kindle
We analyze coordination of monetary and exchange rate policy in a two-sector model of a small open economy featuring imperfect substitution between domestic and foreign financial assets. Our central finding is that management of the exchange rate greatly enhances the efficacy of inflation targeting. In a flexible exchange rate system, inflation targeting incurs a high risk of indeterminacy where macroeconomic fluctuations can be driven by self-fulfilling expectations. Moreover, small inflation shocks may escalate into much larger increases in inflation ex post. Both problems disappear when the central bank leans heavily against the wind in a managed float.
Author | : Richard C. Marston |
Publisher | : University of Chicago Press |
Total Pages | : 332 |
Release | : 2008-04-15 |
Genre | : Business & Economics |
ISBN | : 0226507254 |
Download Misalignment of Exchange Rates Book in PDF, ePub and Kindle
Economists writing on flexible exchange rates in the 1960s foresaw neither the magnitude nor the persistence of the changes in real exchange rates that have occurred in the last fifteen years. Unexpectedly large movements in relative prices have lead to sharp changes in exports and imports, disrupting normal trading relations and causing shifts in employment and output. Many of the largest changes are not equilibrium adjustments to real disturbances but represent instead sustained departures from long-run equilibrium levels, with real exchange rates remaining "misaligned" for years at a time. Contributors to Misalignment of Exchange Rates address a series of questions about misalignment. Several papers investigate the causes of misalignment and the extent to which observed movements in real exchange rates can be attributed to misalignment. These studies are conducted both empirically, through the experiences of the United States, Great Britain, Japan, and the countries of the European Monetary System, and theoretically, through models of imperfect competition. Attention is then turned to the effects of misalignment, especially on employment and production, and to detailed estimates of the effects of changes in exchange rates on several industries, including the U.S. auto industry. In response to the contention that there is significant "hysteresis" in the adjustment of employment and production to changes in exchange rates, contributors also attempt to determine whether the effects of misalignment can be reversed once exchange rates return to earlier levels. Finally, the issue of how to avoid—or at least control—misalignment through macroeconomic policy is confronted.
Author | : Mr.Jerome L. Stein |
Publisher | : International Monetary Fund |
Total Pages | : 46 |
Release | : 1995-08-01 |
Genre | : Business & Economics |
ISBN | : 1451955146 |
Download The Fundamental Determinants of the Real Exchange Rate of the U. S. Dollar Relative to Other G-7 Currencies Book in PDF, ePub and Kindle
The IMF Working Papers series is designed to make IMF staff research available to a wide audience. Almost 300 Working Papers are released each year, covering a wide range of theoretical and analytical topics, including balance of payments, monetary and fiscal issues, global liquidity, and national and international economic developments.