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Living with the Trilemma Constraint: Relative Trilemma Policy Divergence, Crises, and Output Losses for Developing Countries

Aizenman, Joshua; Ito, Hiro - National Bureau of Economic Research (NBER) - 2013

This paper investigates the potential impacts of the degree of divergence in open macroeconomic policies in the context of the trilemma hypothesis. Using an index that measures the relative policy divergence among the three trilemma policy choices, namely monetary independence, exchange rate...

Persistent link: https://www.econbiz.de/10011098322

International Reserves Before and After the Global Crisis: Is There No End to Hoarding?

Aizenman, Joshua; Cheung, Yin-Wong; Ito, Hiro - National Bureau of Economic Research (NBER) - 2014

We evaluate the impact of the global financial crisis (GFC) and recent structural changes in the patterns of hoarding international reserves (IR). We confirm that the determinants of IR hoarding evolve with developments in the global economy. During the pre-GFC period of 1999-2006, gross saving...

Persistent link: https://www.econbiz.de/10011240577

Macroeconomic Performance During Commodity Price Booms and Busts

Cespedes, Luis Felipe; Velasco, Andrés - National Bureau of Economic Research (NBER) - 2012

Fluctuations in commodity prices are often associated with macroeconomic volatility. But not all nations are created equal in this regard. The macro response to commodity booms and busts depends both on the structural characteristics of the economy and on the policy framework that is in place....

Persistent link: https://www.econbiz.de/10010821729

Capital Account Policies and the Real Exchange Rate

Jeanne, Olivier - National Bureau of Economic Research (NBER) - 2012

This paper presents a simple model of how a small open economy can undervalue its real exchange rate using its capital account policies. The paper presents several properties of such policies, and proposes a rule of thumb to assess their welfare cost. The model is applied to an analysis of...

Persistent link: https://www.econbiz.de/10010821914

China's Growth, Stability, and Use of International Reserves

Aizenman, Joshua; Marion, Nancy P.; Jinjarak, Yothin - National Bureau of Economic Research (NBER) - 2013

Since the onset of the global financial crisis, China and the U.S. have reduced their current-account imbalances as a share of GDP to less than half their pre-crisis levels. For China, the reduction in its current-account surplus post-crisis suggests a structural change. Panel regressions for a...

Persistent link: https://www.econbiz.de/10010969460

Liquidity and Foreign Asset Management Challenges for Latin American Countries

Aizenman, Joshua; Riera-Crichton, Daniel - National Bureau of Economic Research (NBER) - 2014

We analyze the degree to which the growing importance of sovereign wealth funds [SWFs] and the diffusion of inflation … Recession and the post-Great Recession period. Inflation targeting (IT) policy matters: IT countries give up the use of reserves …, their monetary authorities place large weights on output gaps; while inflation gains importance for IT countries. Countries …

Persistent link: https://www.econbiz.de/10010951115

Why do emerging markets liberalize capital outflow controls? Fiscal versus net capital flow concerns

Aizenman, Joshua; Pasricha, Gurnain Kaur - National Bureau of Economic Research (NBER) - 2013

In this paper, we provide empirical evidence on the factors that motivated emerging economies to change their capital outflow controls in the recent decades. Liberalization of capital outflow controls can allow emerging market economies (EMEs) to reduce net capital inflow (NKI) pressures, but...

Persistent link: https://www.econbiz.de/10010951123

Collateral Damage: Exchange Controls and International Trade

Wei, Shang-Jin; Zhang, Zhiwei - National Bureau of Economic Research (NBER) - 2007

While new conventional wisdom warns that developing countries should be aware of the risks of premature capital account liberalization, the costs of not removing exchange controls have received much less attention. This paper investigates the negative effects of exchange controls on trade. To...

Persistent link: https://www.econbiz.de/10005088968

Asset Prices and Exchange Rates

Pavlova, Anna; Rigobon, Roberto - National Bureau of Economic Research (NBER) - 2003

This paper develops a simple two-country, two-good model, in which the real exchange rate, stock and bond prices are jointly determined. The model predicts that stock market prices are correlated internationally even though their dividend processes are independent, providing a theoretical...

Persistent link: https://www.econbiz.de/10005084962

Wealth Transfers, Contagion, and Portfolio Constraints

Pavlova, Anna; Rigobon, Roberto - National Bureau of Economic Research (NBER) - 2005

This paper examines the co-movement among stock market prices and exchange rates within a three-country Center-Periphery dynamic equilibrium model in which agents in the Center country face portfolio constraints. In our model, international transmission occurs through the terms of trade, through...

Persistent link: https://www.econbiz.de/10005088553