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Balance Sheets Exchange Rate Policy And Welfare
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Book Synopsis Balance Sheets, Exchange Rate Policy, and Welfare by : Selim Elekdag
Download or read book Balance Sheets, Exchange Rate Policy, and Welfare written by Selim Elekdag and published by International Monetary Fund. This book was released on 2004-04 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: The debate about the appropriate choice of exchange rate regime is fundamental in international economics. This paper develops a small open-economy model with balance sheet effects and compares the performance of fixed and flexible exchange rate regimes. The model is solved up to a second-order approximation which allows us to address the issue of risk and welfare rigorously. The paper identifies threshold levels of the debt-to-GDP ratio above which fixed exchange rate regimes are welfare superior to monetary policy rules that imply flexible exchange rate regimes. The results suggest that emerging market economies that suffer from a relatively high level of indebtedness and are constrained in their pursuit of optimal monetary policy, could find it beneficial to opt for a fixed exchange rate regime.
Book Synopsis Balance Sheets, Exchange Rate Policy, and Welfare by : Selim Ali Elekdag
Download or read book Balance Sheets, Exchange Rate Policy, and Welfare written by Selim Ali Elekdag and published by . This book was released on 2006 with total page 37 pages. Available in PDF, EPUB and Kindle. Book excerpt: The debate about the appropriate choice of exchange rate regime is fundamental in international economics. This paper develops a small open-economy model with balance sheet effects and compares the performance of fixed and flexible exchange rate regimes. The model is solved up to a second-order approximation which allows us to address the issue of risk and welfare rigorously. The paper identifies threshold levels of the debt-to-GDP ratio above which fixed exchange rate regimes are welfare superior to monetary policy rules that imply flexible exchange rate regimes. The results suggest that emerging market economies that suffer from a relatively high level of indebtedness and are constrained in their pursuit of optimal monetary policy, could find it beneficial to opt for a fixed exchange rate regime.
Book Synopsis Balance sheets, exchange rate policy, and welfare by : Selim ; Tchakarov Elekdag (Ivan)
Download or read book Balance sheets, exchange rate policy, and welfare written by Selim ; Tchakarov Elekdag (Ivan) and published by . This book was released on 2004 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Balance Sheets, Exchange Rate Olicy, and Welfare by : Selim Elekdag
Download or read book Balance Sheets, Exchange Rate Olicy, and Welfare written by Selim Elekdag and published by . This book was released on 2004 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Bank Balance Sheets and External Shocks in Asia: The Role of FXI, MPMs and CFMs by : Zefeng Chen
Download or read book Bank Balance Sheets and External Shocks in Asia: The Role of FXI, MPMs and CFMs written by Zefeng Chen and published by International Monetary Fund. This book was released on 2021-01-15 with total page 43 pages. Available in PDF, EPUB and Kindle. Book excerpt: In emerging Asia, banks constitute the dominant source of financing consumption and investment, and bank balance sheets comprise large gross FX assets and liabilities. This paper extends the DSGE model of Gertler and Karadi (2011) to incorporate these key features and estimates a panel vector autoregression on ten Asian economies to understand the role of the banking sector in transmitting spillovers from the global financial cycle to small open economies. It also evaluates the effectiveness of foreign exchange intervention (FXI) and other macroeconomic policies in responding to external financing shocks. External financial shocks affect net external liabilities of banks and the exchange rate, leading to changes in credit supply by banks and investment. For example, a capital outflow shock leads to a deprecation that reduces the net worth and intermediation capacity of banks exposed to foreign currency liabilities. In such cases, the exchange rate acts as shock amplifier and sterilized FXI, often deployed by Asian economies, can help cushion the economy. By contrast, with real shocks, the exchange rate serves as a shock absorber, and any FXI that weakens that function can be costly. We also explore the effectiveness of the monetary policy interest rate, macroprudential policies (MPMs) and capital flow management measures (CFMs).
Book Synopsis Heglme-switching in Exchange Rate Policy and Balance Sheet Effects by :
Download or read book Heglme-switching in Exchange Rate Policy and Balance Sheet Effects written by and published by World Bank Publications. This book was released on with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Balance Sheets and Exchange Rate Policy by : Luis Felipe Céspedes
Download or read book Balance Sheets and Exchange Rate Policy written by Luis Felipe Céspedes and published by . This book was released on 2000 with total page 72 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study the relation among exchange rates, balance sheets, and macroeconomic outcomes in a small open economy. Because liabilities are dollarized, ' a real devaluation has detrimental effects on entreprenurial net worth, which in turn constrains investment due to financial frictions. But there is an offsetting effect, int hat devaluation expands home output and the return to domestic investment, which are also components of net worth. We show that the impact of an adverse foreign shock can be strongly magnified by the balance sheet effect of the associated real devaluation. But the fall in output employment, and investment is stronger under fixed exchange rates than under flexible rates. Hence the conventional wisdom, that flexible exchange rates are better absorbers of real foreign shocks than are fixed rates, holds in spite of potentially large balance sheet effects.
Author :International Monetary Fund. Research Dept. Publisher :International Monetary Fund ISBN 13 :9781589065178 Total Pages :166 pages Book Rating :4.0/5 (651 download)
Book Synopsis IMF Staff Papers, Volume 53, No. 2 by : International Monetary Fund. Research Dept.
Download or read book IMF Staff Papers, Volume 53, No. 2 written by International Monetary Fund. Research Dept. and published by International Monetary Fund. This book was released on 2006-06-29 with total page 166 pages. Available in PDF, EPUB and Kindle. Book excerpt: Noteworthy among the six papers appearing in this latest issue of the IMF's peer-reviewed journal is another installment in the Special Data Section. Anthony Pellechio and John Cady from the IMF's Statistics Department take a close look at differences in IMF data; how and when they could occur; and what the implications of such differences might be for end-users of the IMF's data.
Author :International Monetary Fund Publisher :International Monetary Fund ISBN 13 :9781589064539 Total Pages :410 pages Book Rating :4.0/5 (645 download)
Book Synopsis Dollars, Debt, and Deficits by : International Monetary Fund
Download or read book Dollars, Debt, and Deficits written by International Monetary Fund and published by International Monetary Fund. This book was released on 2005-09-01 with total page 410 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book examines the challenges facing the international monetary and financial system, as well as the future role of the Bretton Woods institutions in addressing those challenges. The volume is based on the proceedings of a 2004 conference cosponsored by the Banco de Espana and the International Monetary Fund to commemorate the 60th anniversary of the Bretton Woods meetings in July 1944. The chapters look at global imbalances, exchange rate issues, debt in emerging economies, and innovations in private and multilateral lending.
Book Synopsis Liability Dollarization and Stability by : David E. Cook
Download or read book Liability Dollarization and Stability written by David E. Cook and published by . This book was released on 2000 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author :International Monetary Fund. European Dept. Publisher :International Monetary Fund ISBN 13 :1484301587 Total Pages :74 pages Book Rating :4.4/5 (843 download)
Book Synopsis Romania by : International Monetary Fund. European Dept.
Download or read book Romania written by International Monetary Fund. European Dept. and published by International Monetary Fund. This book was released on 2017-05-25 with total page 74 pages. Available in PDF, EPUB and Kindle. Book excerpt: This Selected Issues paper estimates a small open economy model that makes it possible to quantify the relative strength of the trade and financial channels in Hungary, Poland. and Romania. The Bayesian results indicate that both the trade and financial channels are strongest for Romania, possibly owing to the expansion of financial balance sheets and lower integration into global supply chains. For all countries, tighter domestic monetary conditions result in reduction of output and currency appreciation, although the magnitude of appreciation is less in Romania compared with peers. The trade channel is also dominant in the transmission of foreign monetary policy shocks, which result in output losses and currency depreciation.
Book Synopsis Trade Linkages, Balance Sheets, and Spillovers by : Selim Elekdag
Download or read book Trade Linkages, Balance Sheets, and Spillovers written by Selim Elekdag and published by International Monetary Fund. This book was released on 2013-10-14 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt: Germany and the Czech Republic, Hungary, Poland, and Slovakia (the CE4) have been in a process of deepening economic integration which has lead to the development of a dynamic supply chain within Europe—the Germany-Central European Supply Chain (GCESC). Model-based simulations suggest two key policy implications: First, as a reflection of strengthening trade linkages, German fiscal spillovers to the CE4 and more broadly to the rest of the euro area, have increased over time, but are still relatively small. This is explained by the supply chain nature of trade integration: final demand in Germany is not necessarily the main determinant of CE4 exports to Germany. Second, increased trade openness in both Germany and the CE4 implies a greater exposure of the GCESC to global shocks. However, owing to its strong fundamentals—including sound balance sheets and its safe haven status— Germany plays the role of a regional anchor of stability by better absorbing shocks from other trading partners instead of amplifying their transmission across the GCESC.
Book Synopsis Inflation Targeting and Exchange Rate Management In Less Developed Countries by : Mr.Marco Airaudo
Download or read book Inflation Targeting and Exchange Rate Management In Less Developed Countries written by Mr.Marco Airaudo and published by International Monetary Fund. This book was released on 2016-03-08 with total page 65 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.
Book Synopsis Weather Shocks and Exchange Rate Flexibility by : Selim Elekdag
Download or read book Weather Shocks and Exchange Rate Flexibility written by Selim Elekdag and published by International Monetary Fund. This book was released on 2022-05-13 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper assesses the stabilization properties of fixed versus flexible exchange rate regimes and aims to answer this research question: Does greater exchange rate flexibility help an economy’s adjustment to weather shocks? To address this question, the impact of weather shocks on real per capita GDP growth is quantified under the two alternative exchange rate regimes. We find that although weather shocks are generally detrimental to per capita income growth, the impact is less severe under flexible exchange rate regimes. Moreover, the medium-term adverse growth impact of a 1 degree Celsius increase in temperature under a pegged regime is about –1.4 percentage points on average, while under a flexible regime, the impact is less than one half that amount (–0.6 percentage point). This finding bolsters the idea that exchange rate flexibility not only helps mitigate the initial impact of the shock but also promotes a faster recovery. In terms of mechanisms, our findings suggest that the depreciation of the nominal exchange rate under a flexible regime supports real export growth. In contrast to standard theoretical predictions, we find that countercyclical fiscal policy may not be effective under pegged regimes amid high debt, highlighting the importance of the policy mix and precautionary (fiscal) buffers.
Book Synopsis Regime-switching in Exchange Rate Policy and Balance Sheet Effects by : Norbert M. Fiess
Download or read book Regime-switching in Exchange Rate Policy and Balance Sheet Effects written by Norbert M. Fiess and published by World Bank Publications. This book was released on 2005 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Balance Sheets and Exchange Rate Policy by :
Download or read book Balance Sheets and Exchange Rate Policy written by and published by . This book was released on with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The National Bureau of Economic Research, Inc. (NBER) presents an abstract of the August 2000 working paper entitled "Balance Sheets and Exchange Rate Policy," written by Luis Felipe Cespedes, Roberto Chang, and Andres Velasco. The full text of the paper may be purchased online. This paper examines the relationship among exchange rates, balance sheets, and macroeconomic outcomes in a small open economy.
Book Synopsis The Diagnostic Financial Accelerator by : Lahcen Bounader
Download or read book The Diagnostic Financial Accelerator written by Lahcen Bounader and published by International Monetary Fund. This book was released on 2024-06-28 with total page 53 pages. Available in PDF, EPUB and Kindle. Book excerpt: We develop a model with diagnostic expectations (DE) and a financial accelerator (FA) that generates mutually reinforcing shock amplification, especially in the case of demand shocks. However, supply shocks can be dampened via a debt deflation channel, which is strengthened amid DE. Importantly, the model results in a worsening of the inflation-output volatility trade-off confronting policymakers. In contrast to most of the literature—which argues against targeting the level of asset prices—our financial accelerator model with DE suggests that targeting house price growth may result in welfare gains.
