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Is the Parallel Market Premium a Reliable Indicator of Real Exchange Rate Misalignment in Developing Countries
Ostry, Jonathan David - 1993
It is often argued that the parallel market premium is a useful indicator of real exchange rate misalignment in developing countries. The empirical evidence does not, however, suggest the existence of a robust correlation between these two endogenous variables that is independent of the nature...
Persistent link: https://www.econbiz.de/10014396125
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External shocks, trade margins, and macroeconomic dynamics
D'Addona, Stefano; Cavallari, Lilia - In: Economies : open access journal 8 (2020) 1/6, pp. 1-26
This paper studies the role of the exchange rate regime for trade of new products. It first provides VAR evidence that a rise in external productivity shifts trade away from new products and more so in fixed regimes. Then, it presents a model with firm dynamics in line with this evidence. We...
Persistent link: https://www.econbiz.de/10012168776
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Supply Shocks and Real Exchange Rate Volatility in a Small Open Economy
Azcona, Nestor - 2016
This paper examines the effect of overall and sector-specific productivity shocks on the real exchange rate in small open economies. A dynamic stochastic small open economy model shows that productivity shocks impact the real exchange rate mostly through changes in the relative price of...
Persistent link: https://www.econbiz.de/10013005242
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The worst of both worlds : fiscal policy and fixed exchange rates
Born, Benjamin; D'Ascanio, Francesco; Müller, Gernot J.; … - 2019
Under fixed exchange rates, fiscal policy is an effective tool. According to classical views because it impacts the real exchange rate, according to Keynesian views because it impacts output. Both views have merit because the effects of government spending are asymmetric. A spending cut lowers...
Persistent link: https://www.econbiz.de/10012118599
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External Shocks, Policies, and Tail-Shifts in Real Exchange Rates
Magud, Nicolás E.; Pienknagura, Samuel - 2023
We use panel quantile regressions to study extreme (rather than average) movements in the distribution of the real effective exchange rate (REER). Global uncertainty (VIX) and financial conditions (U.S. monetary policy) shocks have a strong impact on the distribution of REER changes, with larger...
Persistent link: https://www.econbiz.de/10014346542
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External Shocks, Policies, and Tail-Shifts in Real Exchange Rates
Magud, Nicolás E.; Pienknagura, Samuel - 2023
We use panel quantile regressions to study extreme (rather than average) movements in the distribution of the real effective exchange rate (REER) of small open economies. We document that global uncertainty (VIX) and global financial conditions (U.S. monetary policy) shocks have a strong impact...
Persistent link: https://www.econbiz.de/10014353697
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Do exchange rates absorb demand shocks at the ZLB?
Hoffmann, Mathias; Hürtgen, Patrick - 2021
appreciates in response to an asymmetric negative demand shock at the zero lower bound (ZLB) and exacerbates the adverse … macroeconomic effects. This finding requires inflation expectations to adjust counterfactually large. When modeling inflation … at the ZLB. In sharp contrast to the full information model: (i) A negative demand shock concentrated in the home country …
Persistent link: https://www.econbiz.de/10012510174
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External Shocks, Policies, and Tail-Shifts in Real Exchange Rates
Magud, Nicolas - 2023
We use panel quantile regressions to study extreme (rather than average) movements in the distribution of the real effective exchange rate (REER) of small open economies. We document that global uncertainty (VIX) and global financial conditions (U.S. monetary policy) shocks have a strong impact...
Persistent link: https://www.econbiz.de/10015059308
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The real exchange rate as an instrument of development policy
Razmi, Arslan; Rapetti, Martin; Skott, Peter - 2009
Growth is endogenous in small open economies with substantial hidden or open unemployment, even under constant returns to scale. Growth promoting policies, however, have implications for the balance of trade, and two instruments are needed in order to achieve targets for both the growth rate and...
Persistent link: https://www.econbiz.de/10003879782