This text provides a modern statement of the theory and practice of domestic and international banking and finance. Today, banks are no longer limited to retail deposit-taking and lending operations; they engage in wholesale banking activities, off-balance sheet business, and activities beyond...

With heterogeneous productivity and sticky prices in the short run, exchange rate changes can generate real effects on agents in the economy; the result is that the currency regime becomes a policy variable amenable to political competition. This paper discusses how special interests and...

The paper provides a measure of exchange rate anchoring behaviour across 149 emerging market and developing economies for the 1980-2010 period. An extension of the Frankel and Wei (2008) methodology is used to determine whether exchange rates are pegged or floating, and in the case of pegs, to...

The paper provides a measure of exchange rate anchoring behavior across 149 emerging market and developing economies for the 1980-2010 period. An extension of the Frankel and Wei (2008) methodology is used to determine whether exchange rates are pegged or floating, and in the case of pegs, to...

One argument for floating the Chinese renminbi (RMB) is to insulate China's monetary policy from the US effect. However, we note that both theoretical considerations and empirical results do not offer a definite answer on the link between exchange rate arrangement and policy dependence. We...

Based on a classification of countries and territories according to their regime and anchor currency choice, the study considers the two major currency blocs of the present world. A nested logit regression suggests that long-term structural economic variables determine a given country’s...

This working paper was written by Yin-wong Cheung (University of California, Santa Cruz and University of Hong Kong), Dickson Tam (Hong Kong Institute for Monetary Research) and Matthew S. Yiu (Hong Kong Institute for Monetary Research).One argument for floating the Chinese renminbi (RMB) is to...

Research in both economics and psychology suggests that, when agents predict the next value of a random series, they frequently exhibit two types of biases, which are called the gambler's fallacy (GF) and the hot hand fallacy (HHF). The gambler's fallacy is to expect a negative correlation in a...