The paper explores how international integration through global value chains shapes the working of exchange rates to induce external adjustment both in the short and medium run. The analysis indicates that greater integration into international value chains reduces the exchange rate elasticity...

The impact of monetary policy in large advanced countries on emerging market economies — dubbed spillovers — is hotly debated in global and national policy circles. When the U.S. resorted to unconventional monetary policy, spillovers on asset prices and capital flows were significant, though...

Many emerging market economies have relied on foreign exchange intervention (FXI) in response to gross capital inflows. In this paper, we study whether FXI has been an effective tool to dampen the effects of these inflows on the exchange rate. To deal with endogeneity issues, we look at the...

We demonstrate empirically that not all capital flows influence exchange rates equally: Capital flows induced by foreign investors' stock market transactions have both an economically significant and a permanent impact on exchange rates, whereas capital flows induced by foreign investors'...

This paper examines the impact of Dollar exchange rate volatility on firm productivity in Emerging Markets economies (EMs). Using firm level data covering 16 EMs over the period 1998 -2019, the paper shows that dollar exchange rate volatility reduces firm productivity growth. Exploring channels,...

This paper examines how financial development influences the debt dollarization of nonfinancial firms in a sample of emerging market economies (EMEs). The macroeconomic channels are identified from an optimal portfolio allocation model and assessed empirically using the accounting information of...

Does the South African rand's relatively large volatility affect inflation? To shed some light on this question, a standard estimation technique of exchange rate pass-through to inflation is extended to incorporate exchange rate volatility. Estimated results suggest that higher exchange rate...

Two types of currency in circulation models are identified: (1) a first generation derived fromthe theory of money demand and (2) a second generation aimed at producing daily forecastsof currency in circulation. In this paper, we transform the currency demand function into aVAR to capture the...

Most countries hold large gross asset positions, lending in domestic currency and borrowingin foreign. Thus, their balance sheets are exposed to nominal exchange rates. We argue thatwhen asset markets are incomplete, nominal exchange rate exposure allows countries topartially insure against...

The impact of real exchange rate movements on GDP growth is a hotly debated issue bothin policy and academic circles. In this paper, we provide evidence suggesting that theassociation between exchange rate misalignment and growth for a broad panel ofcountries is very weak. Controlling for...