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Meese and Rogoff (1983) and subsequent studies find that economic fundamentals are apparently not able to explain exchange rate movements, but we argue that this so-called "Exchange Rate Disconnect Puzzle" arose because researchers such as Meese and Rogoff (1983) did not use the right...
Persistent link: https://www.econbiz.de/10011502367
Policymakers fear the potentially destabilizing impact of fickle global investors on emerging markets. Euro area investors are significant participants in emerging bond markets and exhibit volatile flows, but their fickleness does not result in indiscriminate periods of surge and flight....
Persistent link: https://www.econbiz.de/10013240814
Persistent link: https://www.econbiz.de/10011714410
The purpose of this paper is to set out a surprisingly simple solution to the Feldstein-Horioka Puzzle or Paradox, which is that even though global financial markets appear to be integrated, levels of saving and investment are correlated across countries because financial markets cannot, by...
Persistent link: https://www.econbiz.de/10011756014
their required compensation for holding currency risk, thus impacting both the level and volatility of exchange rates. Our …
Persistent link: https://www.econbiz.de/10013034612
The finding of Feldstein and Horioka (1980) that domestic saving and domestic investment are highly correlated across countries despite the rapid globalization and liberalization of financial markets in recent decades has been regarded as a Puzzle or Paradox. However, in this paper, we show that...
Persistent link: https://www.econbiz.de/10014530303
Global capital flows into emerging markets, including those in Asia, continue to be volatile. These capital flows generate both benefits and costs. The latter are associated with episodes of currency and banking crises like the 1997 Asian financial crisis and the 2008 global financial and...
Persistent link: https://www.econbiz.de/10011386741
stabilizing role in financial markets by supplying liquidity and reducing market volatility. While characteristics such as a lack …
Persistent link: https://www.econbiz.de/10003775786
Persistent link: https://www.econbiz.de/10013261043
that the volatility of exchange rates has declined after the imposition of the URR while the volatility of capital flows …
Persistent link: https://www.econbiz.de/10011475657