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Author:
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
This study analyzes why formation of an exchange-rate union, such as the newly-established European Monetary System, can be harmful to the interests of some member countries. The framework provided for analyzing behavior in the union is a three-country model which combines an asset market determination of exchange rates with a price sector emphasizing wage indexation behavior and price competitiveness between countries. The three countries consist of two members of the union as well as a nonmember country (the United states), allowing the study to investigate trade and financial relationships within and outside the union. The study examines how each country's exchange rates and prices respond to stochastic disturbances of several types, of which the most important is a capital account disturbance directly affecting one member's financial market (originating, for example, in shifts between U.S. securities and those of one member country). The analysis shows that the effects of the union on each member country depends upon (1) the source of those economic disturbances which give rise to fluctuations in exchange rates, (2) the share of trade between members of the union, (3) the degree of integration between the financial markets of the member countries, and (4) the responsiveness of domestic wages and prices to changes in exchange rates. The exchange-rate union fixes the cross exchange rate between member currencies, thereby preventing disturbances from affecting this key exchange rate. In doing so, however, the union may actually increase the variability of prices in the economy of one member country. The outcome depends critically upon the degree of financial integration between the two member countries in the absence of the union. The importance of another factor, domestic price responsiveness, is brought out clearly by comparing the alternative extremes of no price adjustment and full price adjustment to exchange rate changes. Price behavior interacts in an interesting way with financial int.
Author:
Publisher:
ISBN:
Category :
Languages : en
Pages :
Get Book Here
Book Description
This study analyzes why formation of an exchange-rate union, such as the newly-established European Monetary System, can be harmful to the interests of some member countries. The framework provided for analyzing behavior in the union is a three-country model which combines an asset market determination of exchange rates with a price sector emphasizing wage indexation behavior and price competitiveness between countries. The three countries consist of two members of the union as well as a nonmember country (the United states), allowing the study to investigate trade and financial relationships within and outside the union. The study examines how each country's exchange rates and prices respond to stochastic disturbances of several types, of which the most important is a capital account disturbance directly affecting one member's financial market (originating, for example, in shifts between U.S. securities and those of one member country). The analysis shows that the effects of the union on each member country depends upon (1) the source of those economic disturbances which give rise to fluctuations in exchange rates, (2) the share of trade between members of the union, (3) the degree of integration between the financial markets of the member countries, and (4) the responsiveness of domestic wages and prices to changes in exchange rates. The exchange-rate union fixes the cross exchange rate between member currencies, thereby preventing disturbances from affecting this key exchange rate. In doing so, however, the union may actually increase the variability of prices in the economy of one member country. The outcome depends critically upon the degree of financial integration between the two member countries in the absence of the union. The importance of another factor, domestic price responsiveness, is brought out clearly by comparing the alternative extremes of no price adjustment and full price adjustment to exchange rate changes. Price behavior interacts in an interesting way with financial int.
Author: Dean Scrimgeour
Publisher:
ISBN:
Category : Currency question
Languages : en
Pages : 40
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Book Description
Author: Ronald MacDonald
Publisher: Edward Elgar Publishing
ISBN: 1849805377
Category : Business & Economics
Languages : en
Pages : 209
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Book Description
This book written by leading academics and practitioners in the field brings together cutting edge research on exchange rate regime and monetary union issues. There is a particular focus on the implications for member states of the Gulf Cooperation Council (GCC) which is itself working towards forming a monetary union for the Gulf States. The relatively dramatic movements in the US dollar in the recent past, and also in the early 1990s, have called the practice of pegging to the US dollar into question for a group of countries that predominantly rely on hydrocarbons as their primary export. The book considers the key issues which must be addressed by the GCC in trying to form a monetary union for the Gulf countries and also the rigid pegging of member states currencies to the US dollar. The proposed monetary union raises clear issues in terms of the appropriateness of such a regime for these countries and whether, for example, the necessary institutional mechanisms are in place ahead of the proposed union. Currency Union and Exchange Rate Issues brings together the perspectives of a group of experts who focus on these important issues, and provide analysis of the policy options. Academics, policymakers and postgraduates in international finance will find much to consider and learn from in this informative book.
Author: Karen H. Johnson
Publisher:
ISBN:
Category : Dollar, American
Languages : en
Pages : 48
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Book Description
Author: Alberto Alesina
Publisher: Judaic Studies (Paperback)
ISBN:
Category : Business & Economics
Languages : en
Pages : 116
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Book Description
What is the optimal number of currencies in the world? Common currencies affect trading costs and, thereby, the amounts of trade, output, and consumption. From the perspective of monetary policy, the adoption of another country's currency trades off the benefits of commitment to price stability against the loss of an independent stabilization policy. The nature of the tradeoff depends on co-movements of disturbances, on distance, trading costs, and on institutional arrangements such as the willingness of anchor countries to accommodate to the interests of clients.
Author: Dominick Salvatore
Publisher: Oxford University Press, USA
ISBN: 019515536X
Category : Business & Economics
Languages : en
Pages : 491
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Book Description
This book takes a global approach to one of today's most controversial topics in business: Dollarization. With the collapse of the former Soviet Union, and the formation of the Euro in Europe, many countries are debating whether or not a common currency is in their best interest. This intriguing volume brings together the leading participants in the current dollarization debates.
Author: International Monetary Fund
Publisher: International Monetary Fund
ISBN: 1498330282
Category : Business & Economics
Languages : en
Pages : 132
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Book Description
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Author: Paul J.J. Welfens
Publisher: Springer Science & Business Media
ISBN: 3642569137
Category : Business & Economics
Languages : en
Pages : 184
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Book Description
The creation of the European Central Bank and the Euro have brought new challenges to EU integration and economic policy. This book looks into issues of monetary and factor market policies. The analysis presents new theoretical and empirical research on the current decline of the Euro. Issues regarding exchange rate policies and international economic relations are also addressed.
Author: Philipp Hartmann
Publisher: Cambridge University Press
ISBN: 0521632730
Category : Business & Economics
Languages : en
Pages : 212
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Book Description
Currency Competition and Foreign Exchange Markets by Philipp Hartmann of the European Central Bank is a major theoretical and empirical study of international currencies, which focuses on the role which the Euro will play in the international monetary and financial system along with the US dollar and the Japanese yen. In contrast to much of the existing literature which approaches the subject from a macroeconomic perspective, Philipp Hartmann develops a theoretical model which uses game theory, time series and panel econometrics, and links financial markets analysis with transaction cost economics. The results of Currency Competition and Foreign Exchange Markets are presented with reference to political, historical and institutional considerations, and provide accessible answers to policy-makers, business people and scholars worldwide. The sections on Spread Estimation and Multiple Vehicles with Inter-Dealer Price and Entry Competition will be of particular use for finance professionals.
Author: Eduardo Levy Yeyati
Publisher: MIT Press
ISBN: 9780262122504
Category : Business & Economics
Languages : en
Pages : 364
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Book Description
Theoretical and empirical analysis of de jure dollarization. With the persistent instability of international financial markets, emerging economies are exploring new ways to reduce exposure to capital flow volatility. Some analysts argue that financially open economies are best served by more flexible regimes, while others argue in favor of extreme exchange rate regimes that have a strong commitment to a fixed parity or dispense with an independent currency. The successful launch of the euro has made more realistic the prospect of replacing a national currency with a strong foreign one. Recent examples include the adoption of the US dollar by Ecuador and El Salvador. The introduction of a foreign currency as sole legal tender, termed full (de jure) dollarization, has been the center of much political and academic debate. This book provides a comprehensive analysis of the issues from both theoretical and empirical perspectives. The topics discussed include the role of balance sheet effects, the linkage between currency risk and country risk, the impact of dollarization on trade, financial integration and credibility, the implications of dollarization for the lender of last resort, and the institutional and political economy aspects of dollarization.
