The Contribution of Fundamental Analysis in the Presence of Inflation and a Currency Devaluation PDF Download
Are you looking for read ebook online? Search for your book and save it on your Kindle device, PC, phones or tablets. Download The Contribution of Fundamental Analysis in the Presence of Inflation and a Currency Devaluation PDF full book. Access full book title The Contribution of Fundamental Analysis in the Presence of Inflation and a Currency Devaluation by Edward P. Swanson. Download full books in PDF and EPUB format.
Author: Edward P. Swanson
Publisher:
ISBN:
Category :
Languages : en
Pages : 33
Get Book Here
Book Description
The primary purpose of this paper is to investigate the value relevance of fundamental analysis under the types of economic conditions that commonly occur in developing countries. By considering changes in key components of operating performance (e.g., changes in gross margin or changes in expenses relative to sales), fundamental analysis has the potential to capture more completely the value relevance of accounting information. Despite this potential, the literature on the value relevance of fundamental analysis is very limited in comparison to the vast literature investigating the value relevance of the two key summary measures provided in financial statements: earnings and book value. Furthermore, little is known about the advantage, if any, of fundamental analysis over summary measures in economic settings that are significantly different from that of the United States. This paper uses Mexico as a setting in which to explore further the value relevance of fundamental analysis. Mexico differs from the U.S. in two important respects that may influence the incremental value of fundamental analysis: First, during the 1990s, Mexican businesses had to cope with a rapidly changing business climate. Second, Mexican companies have reported replacement-cost, price-level-adjusted (RCPLA) information in the primary financial statements since 1984. Under RCPLA accounting, all balances reported on the financial statements, including the prior year amounts, are rolled forward into purchasing power at the end of the most recent period.We find that fundamental analysis has incremental value relevance in comparison to earnings. Of particular interest, fundamental signals based on line-item components of the 1994 financial statements, but not earnings, provided value relevant information about the effects of the December 1994 devaluation on the market's expectation about changes in future cash flows. This study makes a direct contribution to understanding the value relevance of fundamental analysis and accounting for changing prices. In addition, the study adds to a recent literature investigating the interaction between economic change and the value relevance of financial statement information.
Author: Edward P. Swanson
Publisher:
ISBN:
Category :
Languages : en
Pages : 33
Get Book Here
Book Description
The primary purpose of this paper is to investigate the value relevance of fundamental analysis under the types of economic conditions that commonly occur in developing countries. By considering changes in key components of operating performance (e.g., changes in gross margin or changes in expenses relative to sales), fundamental analysis has the potential to capture more completely the value relevance of accounting information. Despite this potential, the literature on the value relevance of fundamental analysis is very limited in comparison to the vast literature investigating the value relevance of the two key summary measures provided in financial statements: earnings and book value. Furthermore, little is known about the advantage, if any, of fundamental analysis over summary measures in economic settings that are significantly different from that of the United States. This paper uses Mexico as a setting in which to explore further the value relevance of fundamental analysis. Mexico differs from the U.S. in two important respects that may influence the incremental value of fundamental analysis: First, during the 1990s, Mexican businesses had to cope with a rapidly changing business climate. Second, Mexican companies have reported replacement-cost, price-level-adjusted (RCPLA) information in the primary financial statements since 1984. Under RCPLA accounting, all balances reported on the financial statements, including the prior year amounts, are rolled forward into purchasing power at the end of the most recent period.We find that fundamental analysis has incremental value relevance in comparison to earnings. Of particular interest, fundamental signals based on line-item components of the 1994 financial statements, but not earnings, provided value relevant information about the effects of the December 1994 devaluation on the market's expectation about changes in future cash flows. This study makes a direct contribution to understanding the value relevance of fundamental analysis and accounting for changing prices. In addition, the study adds to a recent literature investigating the interaction between economic change and the value relevance of financial statement information.
Author: Mingshan Zhang
Publisher:
ISBN:
Category : Foreign exchange
Languages : en
Pages : 352
Get Book Here
Book Description
Author: Jongrim Ha
Publisher: World Bank Publications
ISBN: 1464813760
Category : Business & Economics
Languages : en
Pages : 513
Get Book Here
Book Description
This is the first comprehensive study in the context of EMDEs that covers, in one consistent framework, the evolution and global and domestic drivers of inflation, the role of expectations, exchange rate pass-through and policy implications. In addition, the report analyzes inflation and monetary policy related challenges in LICs. The report documents three major findings: In First, EMDE disinflation over the past four decades was to a significant degree a result of favorable external developments, pointing to the risk of rising EMDE inflation if global inflation were to increase. In particular, the decline in EMDE inflation has been supported by broad-based global disinflation amid rapid international trade and financial integration and the disruption caused by the global financial crisis. While domestic factors continue to be the main drivers of short-term movements in EMDE inflation, the role of global factors has risen by one-half between the 1970s and the 2000s. On average, global shocks, especially oil price swings and global demand shocks have accounted for more than one-quarter of domestic inflation variatio--and more in countries with stronger global linkages and greater reliance on commodity imports. In LICs, global food and energy price shocks accounted for another 12 percent of core inflation variatio--half more than in advanced economies and one-fifth more than in non-LIC EMDEs. Second, inflation expectations continue to be less well-anchored in EMDEs than in advanced economies, although a move to inflation targeting and better fiscal frameworks has helped strengthen monetary policy credibility. Lower monetary policy credibility and exchange rate flexibility have also been associated with higher pass-through of exchange rate shocks into domestic inflation in the event of global shocks, which have accounted for half of EMDE exchange rate variation. Third, in part because of poorly anchored inflation expectations, the transmission of global commodity price shocks to domestic LIC inflation (combined with unintended consequences of other government policies) can have material implications for poverty: the global food price spikes in 2010-11 tipped roughly 8 million people into poverty.
Author: Camila Casas
Publisher: International Monetary Fund
ISBN: 1484330609
Category : Business & Economics
Languages : en
Pages : 62
Get Book Here
Book Description
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.
Author: R. Glenn Hubbard
Publisher: University of Chicago Press
ISBN: 9780226355887
Category : Business & Economics
Languages : en
Pages : 420
Get Book Here
Book Description
Warnings of the threat of an impending financial crisis are not new, but do we really know what constitutes an actual episode of crisis and how, once begun, it can be prevented from escalating into a full-blown economic collapse? Using both historical and contemporary episodes of breakdowns in financial trade, contributors to this volume draw insights from theory and empirical data, from the experience of closed and open economies worldwide, and from detailed case studies. They explore the susceptibility of American corporations to economic downturns; the origins of banking panics; and the behavior of financial markets during periods of crisis. Sever papers specifically address the current thrift crisis—including a detailed analysis of the over 500 FSLIC-insured thrifts in the southeast—and seriously challenge the value of recent measures aimed at preventing future collapse in that industry. Government economists and policy makers, scholars of industry and banking, and many in the business community will find these timely papers an invaluable reference.
Author: Mr.Stijn Claessens
Publisher: International Monetary Fund
ISBN: 1475561008
Category : Business & Economics
Languages : en
Pages : 66
Get Book Here
Book Description
This paper reviews the literature on financial crises focusing on three specific aspects. First, what are the main factors explaining financial crises? Since many theories on the sources of financial crises highlight the importance of sharp fluctuations in asset and credit markets, the paper briefly reviews theoretical and empirical studies on developments in these markets around financial crises. Second, what are the major types of financial crises? The paper focuses on the main theoretical and empirical explanations of four types of financial crises—currency crises, sudden stops, debt crises, and banking crises—and presents a survey of the literature that attempts to identify these episodes. Third, what are the real and financial sector implications of crises? The paper briefly reviews the short- and medium-run implications of crises for the real economy and financial sector. It concludes with a summary of the main lessons from the literature and future research directions.
Author: National Intelligence Council
Publisher: Cosimo Reports
ISBN: 9781646794973
Category :
Languages : en
Pages : 158
Get Book Here
Book Description
"The ongoing COVID-19 pandemic marks the most significant, singular global disruption since World War II, with health, economic, political, and security implications that will ripple for years to come." -Global Trends 2040 (2021) Global Trends 2040-A More Contested World (2021), released by the US National Intelligence Council, is the latest report in its series of reports starting in 1997 about megatrends and the world's future. This report, strongly influenced by the COVID-19 pandemic, paints a bleak picture of the future and describes a contested, fragmented and turbulent world. It specifically discusses the four main trends that will shape tomorrow's world: - Demographics-by 2040, 1.4 billion people will be added mostly in Africa and South Asia. - Economics-increased government debt and concentrated economic power will escalate problems for the poor and middleclass. - Climate-a hotter world will increase water, food, and health insecurity. - Technology-the emergence of new technologies could both solve and cause problems for human life. Students of trends, policymakers, entrepreneurs, academics, journalists and anyone eager for a glimpse into the next decades, will find this report, with colored graphs, essential reading.
Author: Laurent Ferrara
Publisher: Springer
ISBN: 3319790757
Category : Business & Economics
Languages : en
Pages : 300
Get Book Here
Book Description
This book collects selected articles addressing several currently debated issues in the field of international macroeconomics. They focus on the role of the central banks in the debate on how to come to terms with the long-term decline in productivity growth, insufficient aggregate demand, high economic uncertainty and growing inequalities following the global financial crisis. Central banks are of considerable importance in this debate since understanding the sluggishness of the recovery process as well as its implications for the natural interest rate are key to assessing output gaps and the monetary policy stance. The authors argue that a more dynamic domestic and external aggregate demand helps to raise the inflation rate, easing the constraint deriving from the zero lower bound and allowing monetary policy to depart from its current ultra-accommodative position. Beyond macroeconomic factors, the book also discusses a supportive financial environment as a precondition for the rebound of global economic activity, stressing that understanding capital flows is a prerequisite for economic-policy decisions.
Author: Mr.Dennis P. J. Botman
Publisher: International Monetary Fund
ISBN: 1475513429
Category : Business & Economics
Languages : en
Pages : 21
Get Book Here
Book Description
During risk-off episodes, the yen is a safe haven currency and on average appreciates against the U.S. dollar. We investigate the proximate causes of yen risk-off appreciations. We find that neither capital inflows nor expectations of the future monetary policy stance can explain the yen’s safe haven behavior. In contrast, we find evidence that changes in market participants’ risk perceptions trigger derivatives trading, which in turn lead to changes in the spot exchange rate without capital flows. Specifically, we find that risk-off episodes coincide with forward hedging and reduced net short positions or a buildup of net long positions in yen. These empirical findings suggest that offshore and complex financial transactions should be part of spillover analyses and that the effectiveness of capital flow management measures or monetary policy coordination to address excessive exchange rate volatility might be limited in certain cases.
Author: Ronald MacDonald
Publisher: Routledge
ISBN: 1134838220
Category : Foreign exchange
Languages : en
Pages : 334
Get Book Here
Book Description
''In summary, the book is valuable as a textbook both at the advanced undergraduate level and at the graduate level. It is also very useful for the economist who wants to be brought up-to-date on theoretical and empirical research on exchange rate behaviour.'' ""Journal of International Economics""
