We examine whether the Chinese exchange rate is misaligned and how Chinese trade flows respond to the exchange rate and to economic activity. We find, first, that the Chinese currency, the renminbi (RMB), is substantially below the value predicted by estimates based upon a cross-country sample,...

The financial crisis has re-ignited the fierce debate about the merits of financial globalization and its implications for growth, especially for developing countries. The empirical literature has not been able to conclusively establish the presumed growth benefits of financial integration....

There are significant effects of changing demographics on economic indicators: growth in GDP especially, but also the current account balance and gross capital formation. The 15-24 age group appears to be one of the key age groups in these effects, with increases in that age group exerting...

China and the U.S. have a close but complicated economic relationship. This note provides a fuller picture of the tightening embrace between the two countries - in terms of flows of goods and services, financial capital and people - and discusses the potential flashpoints in this relationship....

Motivated by the observed international reserve hoarding behavior in the post-1997 crisis period, we explore the Mrs Machlup's wardrobe hypothesis and the related keeping up with the Joneses argument. It is conceived that, in addition to psychological reasons, holding a relatively high level of...

In theory, nominal exchange rate movements can lead to 'expenditure switching' when they generate changes in the relative prices of goods across countries. This paper explores whether the expenditure-switching role of exchange rates has changed in the current episode of significant global...

Using bank-specific data on U.S. bank claims on individual foreign countries since the mid-1980s, this paper 1) characterizes the size and portfolio diversification patterns of the U.S. banks engaging in foreign lending, and 2) econometrically explores the determinants of fluctuations in U.S....

This paper considers the general equilibrium relationship between exchange rates and global imbalances. It emphasizes that the exchange rate is not a primitive but an equilibrium price determined by the policy mix. It uses extensions of the two-country Obstfeld-Rogoff model to analyze the...

The use of different currencies in the invoicing of international trade transactions plays a major role in the international transmission of economic fluctuations. Existing studies argue that an exporter's invoicing choice reflects structural aspects of its industry, such as market share and the...

This paper examines how cross-border differences in the stringency of bank regulations affect U.S. banks' international activities. The analysis relies on a unique bank-level dataset on the globally most active U.S. banks' balance sheet as well as their cross-border, foreign affiliate lending...