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Author: Ralph Johann
Publisher: GRIN Verlag
ISBN: 3640158733
Category : Business & Economics
Languages : en
Pages : 24
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Book Description
Seminar paper from the year 2005 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, grade: 1,3, California State University, Fullerton, course: International Economics, language: English, abstract: This paper will discuss the general relationship between the two major currencies of the world: the US-Dollar and the Euro and the determinants for the exchange rate fluctuations since the introduction of the Euro as the common currency of Europe during the period between January 1999 and November 2005. Since the introduction of the Euro as the common currency of the European Monetary Union (EMU) in 1999 this relationship was first characterized by a sharp depreciation of the Euro followed by a three year lasting appreciation of the same that passed over in a slight depreciation again from the beginning of 2005 in the long run.1 This paper will first focus on the History of the international currency exchange system from the 19th century until the end of the Bretton Woods System in 1973 and on the history of the currency system in the European community. It will then discuss the general determinants of exchange rates in the short and long run. It will be pointed out that in the short run interest rate differentials and expectations of international portfolio investors matter and in the long run the economic fundamentals such as inflation rates and GDP growth rates of either economic region are the main factors for the behaviour of the exchange rate. In this context the theories of the Law of one price and the purchasing power parity are introduced. In the third part of the paper the exchange rate theories introduced in the previous part are applied to the €-$ exchange rate in the time period between 1999 and 2005. Thus, the short term and long term factors are used to explain the relationship between the two currencies in this period. Finally, the last part serves as a conclusion.
Author: Ralph Johann
Publisher: GRIN Verlag
ISBN: 3640158733
Category : Business & Economics
Languages : en
Pages : 24
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Book Description
Seminar paper from the year 2005 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, grade: 1,3, California State University, Fullerton, course: International Economics, language: English, abstract: This paper will discuss the general relationship between the two major currencies of the world: the US-Dollar and the Euro and the determinants for the exchange rate fluctuations since the introduction of the Euro as the common currency of Europe during the period between January 1999 and November 2005. Since the introduction of the Euro as the common currency of the European Monetary Union (EMU) in 1999 this relationship was first characterized by a sharp depreciation of the Euro followed by a three year lasting appreciation of the same that passed over in a slight depreciation again from the beginning of 2005 in the long run.1 This paper will first focus on the History of the international currency exchange system from the 19th century until the end of the Bretton Woods System in 1973 and on the history of the currency system in the European community. It will then discuss the general determinants of exchange rates in the short and long run. It will be pointed out that in the short run interest rate differentials and expectations of international portfolio investors matter and in the long run the economic fundamentals such as inflation rates and GDP growth rates of either economic region are the main factors for the behaviour of the exchange rate. In this context the theories of the Law of one price and the purchasing power parity are introduced. In the third part of the paper the exchange rate theories introduced in the previous part are applied to the €-$ exchange rate in the time period between 1999 and 2005. Thus, the short term and long term factors are used to explain the relationship between the two currencies in this period. Finally, the last part serves as a conclusion.
Author: Ralph Johann
Publisher: GRIN Verlag
ISBN: 3640159772
Category : Business & Economics
Languages : en
Pages : 30
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Book Description
Seminar paper from the year 2005 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, grade: 1,3, California State University, Fullerton, course: International Economics, 8 entries in the bibliography, language: English, abstract: This paper will discuss the general relationship between the two major currencies of the world: the US-Dollar and the Euro and the determinants for the exchange rate fluctuations since the introduction of the Euro as the common currency of Europe during the period between January 1999 and November 2005. Since the introduction of the Euro as the common currency of the European Monetary Union (EMU) in 1999 this relationship was first characterized by a sharp depreciation of the Euro followed by a three year lasting appreciation of the same that passed over in a slight depreciation again from the beginning of 2005 in the long run.1 This paper will first focus on the History of the international currency exchange system from the 19th century until the end of the Bretton Woods System in 1973 and on the history of the currency system in the European community. It will then discuss the general determinants of exchange rates in the short and long run. It will be pointed out that in the short run interest rate differentials and expectations of international portfolio investors matter and in the long run the economic fundamentals such as inflation rates and GDP growth rates of either economic region are the main factors for the behaviour of the exchange rate. In this context the theories of the Law of one price and the purchasing power parity are introduced. In the third part of the paper the exchange rate theories introduced in the previous part are applied to the -$ exchange rate in the time period between 1999 and 2005. Thus, the short term and long term factors are used to explain the relationship between the two currencies in this period. Finally, the last part serves as a conclusion.
Author: Jörg Clostermann
Publisher:
ISBN: 9783933747426
Category :
Languages : en
Pages : 0
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Book Description
Author: Jörg Clostermann
Publisher:
ISBN:
Category :
Languages : en
Pages : 34
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Book Description
At the beginning of 1999 the euro was launched as a common currency in 11 EuropeanZum Jahresbeginn 1999 wurde der Euro als gemeinsame Währung in 11 europäischen.
Author: Alessio Anzuini
Publisher:
ISBN:
Category :
Languages : en
Pages : 19
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Book Description
Author: Jerome L. Stein
Publisher: Oxford University Press
ISBN: 9780198293064
Category : Business & Economics
Languages : en
Pages : 276
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Book Description
"This book greatly enhances our understanding of the behavior of real exchange rates. It provides an elegant model based on a solid theoretical foundation that links real exchange rates to their fundamental economic determinants and takes proper account of stock and flow considerations. The authors provide a masterful account of how changes in productivity and thrift affect the real exchange rate, and show that the long-run impact depends crucially on whether the change reflects the former fundamental (investment) or the latter (consumption). The empirical implementation uses state-of-the-art cointegration and error correction methodologies that are eminently well suited to capture the short-run adjustment of the real exchange rate to its medium- to long-run equilibrium value. The empirical results are extremely encouraging, as the economic fundamentals identified by the authors can explain a substantial part of the movement in the real exchange rate of a number of countries."--Peter Clark, International Monetary Fund
Author: Gabriella M. Cagliesi
Publisher:
ISBN:
Category :
Languages : en
Pages : 46
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Book Description
This paper examines the determinants of the Euro-Dollar exchange rate, using the news approach to exchange rate modeling and some behavioral finance categories in the interpretation of its dynamics. A twice-daily frequency estimation was chosen, dividing the global trading day into an European Time Zone, ETZ (including also Asian trading), and an American Time Zone, ATZ. A new typology of news variables, unscheduled news, was employed, together with the traditional scheduled macroeconomic news. These former news, consisting of policy statements, market events, market beliefs, terror-related events turned out to be the main determinants of Euro-Dollar movements. Coefficient stability tests suggested to divide our 1999-2004 sample into three sub-periods roughly corresponding to the three phases of recent Euro history. The main finding of our analysis is the rejection of the semi-strong EMH once we move from the estimation over the entire sample to the three sub-periods. Here we find many lagged news variables to be significant, contrary to what EMH posits. The distribution of lagged news across time zones (ETZ and ATZ) and among the three sub-periods, indicates a substantial heterogeneity in the way news are decoded by market participants in the two trading zones and that exchange rates in ATZ react almost exclusively to American news, indicating that this zone influences the rest of the world but it is not affected by it. Scheduled news play a much bigger role in ATZ than in ETZ, especially the creation of new jobs in the US (the Non-farm Payroll). Exchange rate dynamics in ETZ is determined mostly by unscheduled news.
Author: Leonardo Baggiani
Publisher:
ISBN:
Category :
Languages : en
Pages : 29
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Book Description
With this work I try to venture an odd interpretation on the short term determinants of the Euro-Dollar exchange rate. The starting point is the Quantitative Theory of Money as formulated by Milton Friedman, where I have added a further money-demand component as a derivation of globally-based Asset Allocation strategies; such component involves an exchange rate's dependency on interest rates opposite to what follows from Friedman's theory. Tests on alternative solutions let me lean to choose a counter-intuitively featured model, where exchange rate depends on the whole history of interest rates, more precisely the interest-rates forward-contracts' final-values time series, and is led by financial-flows' speculative dynamics. Model features entails hypotheses of a very high substitutability between bonds issued in the two monetary areas involved, prevailing of further seemingly casual factors, and presence of inertia and persistence phenomena who prevent the exchange rate from moving accordingly to the main equilibrium conditions such as Purchasing Power Parity and Uncovered Interest Parity.
Author: Pau Rabanal
Publisher: International Monetary Fund
ISBN:
Category : Business & Economics
Languages : en
Pages : 48
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Book Description
We use a Bayesian approach to estimate a standard two-country New Open Economy Macroeconomics model using data for the United States and the euro area, and we perform model comparisons to study the importance of departing from the law of one price and complete markets assumptions. Our results can be summarized as follows. First, we find that the baseline model does a good job in explaining real exchange rate volatility but at the cost of overestimating volatility in output and consumption. Second, the introduction of incomplete markets allows the model to better match the volatilities of all real variables. Third, introducing sticky prices in Local Currency Pricing improves the fit of the baseline model but does not improve the fit as much as introducing incomplete markets. Finally, we show that monetary shocks have played a minor role in explaining the behavior of the real exchange rate, while both demand and technology shocks have been important.
Author: Klaus Liebscher
Publisher: Edward Elgar Publishing
ISBN: 1848445091
Category : Business & Economics
Languages : en
Pages : 337
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Book Description
Competitiveness is a notoriously slippery concept. This volume, featuring a galaxy of economic stars, lends some much-needed precision to the term and the debate over its determinants. Barry Eichengreen, University of California, Berkeley, US This book combines currency matters with competitiveness considerations, with a view to raising the understanding of exchange rate dynamics and to analysing the role of exchange rates in reinforcing economic competitiveness. The overall focus is on highlighting the link between currency developments and the real side of the economy. From a regional perspective, the contributions centre on developments in Central, Eastern and South-eastern Europe and thus put a special emphasis on aspects of transition and convergence. More specifically, the book addresses key issues of financial globalization and global imbalances; the role of macroeconomic fundamentals in exchange rate economics; the role, objectives and challenges of regional monetary unions; exchange rate dynamics in transition economies and the competitiveness of catching-up countries. It also addresses the structural aspects of competitiveness and the significance of qualitative and quantitative aspects of competitiveness. Offering the views of eminent academics and professionals, this book will be of great interest to economists and central bankers as well as to international organizations, universities and research institutes.
