This paper investigates the impact of exchange rates on US Foreign Direct Investment (FDI)inflows to a sample of 16 emerging market countries using panel data for the period 1990-2002. Threevariables are used to capture separate exchange rate effects. The nominal bilateral exchange rate tothe...

A striking and unexpected feature of the financial crisis has been the sharpappreciation of the US dollar against virtually all currencies globally. The paper findsthat negative US-specific macroeconomic shocks during the crisis have triggered asignificant strengthening of the US dollar, rather...

Real effective exchange rate volatility is examined for 90 countries using monthlydata from January 1990 to June 2006. Volatility decreases with openness tointernational trade and per capita GDP, and increases with inflation, particularlyunder a horizontal peg or band, and with terms-of-trade...

Previous research has suggested that pegged exchange rates are associated withlower inflation than floating rates. In which direction does the causality run?Using data from a large sample of developing countries from 1984 to 2000, weconfirm that “hard” pegs (currency boards or a shared...

[...]In this article, we pursue a transaction-oriented line ofresearch to help track short-term exchange rate movements. Byexamining a publicly available data set well known to currencymarket analysts—net positions held by speculators in thefutures market—we are able to document a strong...

The objective of this paper is to analyze the effects of alternative monetary rules on realexchange rate persistence. Using a two-country stochastic dynamic general equilibrium withnominal price stickiness and local currency pricing, we will show how the persistence ofpurchasing power parity...

This paper examines the economic exposure of German corporations to changes in the DM/US-dollar exchange-rate. Our work contributes to the existing body of literature in the following ways. Firstly, we point out conceptual problems of previous attempts to estimate economic exposure. Secondly, we...

A second-generation model of currency crises is combined with a standard model ofbanks as providers of insurance against liquidity risk. In a pegged exchange rateregime, after funds have been committed to the banks, news arrives about the qualityof the banks’ assets and about the exchange rate...

In currency crises, unlike in orderly devaluations, the financial markets dominateevents. It is shown that currency collapses (crises followed by depreciations) have hada much greater adverse impact in emerging markets (defined as relatively highincomedeveloping countries exposed to...

This paper analyses predictions of a simple model of currency crises in which the peg will beabandoned when the currency overvaluation hits a certain threshold, unknown to the agents. Due tolearning about the threshold, some features usually observed in the data and identified with modelswith...