Anticipated Real Exchange-rate Changes and the Dynamics of Investment

Anticipated Real Exchange-rate Changes and the Dynamics of Investment PDF Author: Luis Serven
Publisher: World Bank Publications
ISBN:
Category : Foreign exchange rates
Languages : en
Pages : 54

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Book Description
Unanticipated changes in the real exchange rate affect investment through their impact on the desired capital stock, whose direction depends on a number of factors and is in general ambiguous. In contrast, anticipated changes can also have an important effect on the optimal timing of investment, in a direction that depends on the financial openness of the economy and on the important content of capital goods. This issue is explored using a simple macroeconomic model.

Anticipated Real Exchange-rate Changes and the Dynamics of Investment

Anticipated Real Exchange-rate Changes and the Dynamics of Investment PDF Author: Luis Serven
Publisher: World Bank Publications
ISBN:
Category : Foreign exchange rates
Languages : en
Pages : 54

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Book Description
Unanticipated changes in the real exchange rate affect investment through their impact on the desired capital stock, whose direction depends on a number of factors and is in general ambiguous. In contrast, anticipated changes can also have an important effect on the optimal timing of investment, in a direction that depends on the financial openness of the economy and on the important content of capital goods. This issue is explored using a simple macroeconomic model.

Real Exchange Rates, Economic Complexity, and Investment

Real Exchange Rates, Economic Complexity, and Investment PDF Author: Steve Brito
Publisher: International Monetary Fund
ISBN: 1484356349
Category : Business & Economics
Languages : en
Pages : 21

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Book Description
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.

The Fundamental Determinants of the Real Exchange Rate of the U. S. Dollar Relative to Other G-7 Currencies

The Fundamental Determinants of the Real Exchange Rate of the U. S. Dollar Relative to Other G-7 Currencies PDF Author: Mr.Jerome L. Stein
Publisher: International Monetary Fund
ISBN: 1451955146
Category : Business & Economics
Languages : en
Pages : 46

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Book Description
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.

Measuring Real Exchange Rate Instablity in Developing Countires

Measuring Real Exchange Rate Instablity in Developing Countires PDF Author:
Publisher: World Bank Publications
ISBN:
Category :
Languages : en
Pages : 30

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Book Description


Dominant Currency Paradigm: A New Model for Small Open Economies

Dominant Currency Paradigm: A New Model for Small Open Economies PDF Author: Camila Casas
Publisher: International Monetary Fund
ISBN: 1484330609
Category : Business & Economics
Languages : en
Pages : 62

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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.

Exchange Rate Economics

Exchange Rate Economics PDF Author: Ronald MacDonald
Publisher: Routledge
ISBN: 1134838220
Category : Foreign exchange
Languages : en
Pages : 334

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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""

NBER Macroeconomics Annual 1995

NBER Macroeconomics Annual 1995 PDF Author: Ben S. Bernanke
Publisher: MIT Press
ISBN: 9780262522052
Category : Business & Economics
Languages : en
Pages : 364

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Book Description
Contents : Wage Inequality and Regional Unemployment Persistence: U.S. vs. Europe, Guiseppe BErtola and Andreas Ichino. Capital Utilization and Returns to Scale, Craig Burnside, Martin Eichenbaum, and Sergio Rebelo. Banks and Derivatives, Gary Gorton and Richard Rosen. Exchange-Rate-Based Stabilizations: Theory and Evidence, Sergio Rebelo and Carlos Vegh. Inflation Indicators and Inflation Policy, Stephen Cecchetti. Recent Central Bank Reforms and the Role of Price Stability as the Sole Objective of Monetary Policy, Carl Walsh. Is Central Bank Independence (and Low Inflation) the Result of Effective Financial Opposition to Inflation?, Adam Posen. The Unending Quest for Monetary Salvation, Stanley Fischer.

Striving for Growth After Adjustment

Striving for Growth After Adjustment PDF Author: Luis Serven
Publisher: World Bank Publications
ISBN: 9780821324844
Category : Business & Economics
Languages : en
Pages : 304

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Book Description
This book presents the results of about three years of work finished in early 1992 in the area of private investment and macroeconomic adjustment. Its purpose is to explore the macroeconomic determinants of investment and the causes and cures for the gap between maroeconomic adjustment and stabilization and the resumption of economic growth in developing countries, a gap that even today - 10 years after the debt crisis and the subsequent adjustment of the eighties - remains wide. This volume highlights the central role of capital formation (public and private) in the restoration of sustainable growth.

Dynamic Response to Foreign Transfers and Terms-of-trade Shocks in Open Economies

Dynamic Response to Foreign Transfers and Terms-of-trade Shocks in Open Economies PDF Author: Klaus Schmidt-Hebbel
Publisher: World Bank Publications
ISBN:
Category : Comercio internacional
Languages : en
Pages : 52

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Book Description
Both permanent and transitory disturbances can change long- run capacity and output -- although they may have opposite effects on the current account. Liquidity constraints and wage rigidities tend to amplify the cyclical adjustment to external shocks.

Development Macroeconomics

Development Macroeconomics PDF Author: Pierre-Richard Agénor
Publisher: Princeton University Press
ISBN: 0691165394
Category : Business & Economics
Languages : en
Pages : 792

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Book Description
The global financial crisis triggered severe shocks for developing countries, whose embrace of greater commercial and financial openness has increased their exposure to external shocks, both real and financial. This new edition of Development Macroeconomics has been fully revised to address the more open and less stable environment in which developing countries operate today. Describing the latest advances in this rapidly changing field, the book features expanded coverage of public debt and the management of capital inflows as well as new material on fiscal discipline, monetary policy regimes, currency, banking and sovereign debt crises, currency unions, and the choice of an exchange-rate regime. A new chapter on dynamic stochastic general equilibrium (DSGE) models with financial frictions has been added to reflect how the financial crisis has reshaped our thinking on the role of such frictions in generating and propagating real and financial shocks. The book also discusses the role of macroprudential regulation, both independently and through its interactions with monetary policy, in preserving financial and macroeconomic stability. Now in its fourth edition, Development Macroeconomics remains the definitive textbook on the macroeconomics of developing countries. The most authoritative book on the subject—now fully revised and expanded Features new material on fiscal discipline, monetary policy regimes, currency, banking and sovereign debt crises, and much more Comes with online supplements on informal financial markets, stabilization programs, the solution of DSGE models with financial frictions, and exchange rate crises