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A Theory of Foreign Exchange Interventions

Fanelli, Sebastian - 2016

We develop a theory of foreign exchange interventions in the presence of limited capital mobility. We study a real small open economy subject to global liquidity and endowment shocks. Home and foreign bond markets are segmented and intermediaries have a limited capacity to arbitrage between both...

Persistent link: https://www.econbiz.de/10012982006

Coordination of Wage Bargaining, Exchange Rate Stability and External Adjustment

Nieminen, Mika - 2016

The literature on the determinants of the rate of current account reversion has been limited to examining the role of exchange rate regimes. We propose that the degree of coordination of wage bargaining affects the speed of current account adjustment. Our point estimates are economically and...

Persistent link: https://www.econbiz.de/10012983317

Impact of Exchange Rates on Consumer Prices in India : Comparing Different Trade Liberalization and Monetary Policy Regimes

Sohrabji, Niloufer - 2011

This paper examines the relation between exchange rates and prices in India over three periods, 1975-1986, 1992-1998 and 1999-2010. These periods which are marked with changing trading and monetary policy regimes provide an interesting case study to analyze the importance of openness and...

Persistent link: https://www.econbiz.de/10014185400

The Effects of Capital Controls on Exchange Rate Volatility and Output

Frenkel, Michael; Nickel, Christiane; Schmidt, Gunter; … - 2003

This paper extends the Dornbusch model of overshooting exchange rates to discuss both exchange rate and output effects of capital controls that involve additional costs for international asset transactions. We show that, on the one hand, such capital controls have the merit of reducing the...

Persistent link: https://www.econbiz.de/10014122083

On the Contingency of Equilibrium Exchange Rates with Time Consistent Economic Policies

Bouveret, Antoine; Ducoudre, Bruno - 2007

Equilibrium exchange rate theories (FEER, BEER and NATREX) make the assumption that the Real Equilibrium Exchange Rate (RER) is independent from internal equilibrium and economic policies. We develop a model in which economic policies depend on the minimisation of an intertemporal loss function...

Persistent link: https://www.econbiz.de/10014052669

Exchange Rate Models, Long Run Equilibrium, Dynamics and Hysteresis

Bouveret, Antoine; Sterdyniak, Henri - 2007

Forecasting exchange rates remains a tricky issue for economists. In spite of a theoretical consistent framework, macroeconomic models fail to beat random walk models and market expectations doesn't have any predictive power. This article addresses some problems of exchange rate macroeconomic...

Persistent link: https://www.econbiz.de/10014062157

Current Account Dynamics and the Real Exchange Rate : Disentangling the Evidence

Karadimitropoulou, Aikaterini; Bussière, Matthieu; … - 2022

We study the main shocks driving current account fluctuations for the G6 economies. Our theoretical framework features … fluctuations; ii) temporary domestic shocks account for a large proportion of current account fluctuations, but the excess response …, which explains why is it difficult to understand the role of the real exchange rate for current account fluctuations …

Persistent link: https://www.econbiz.de/10014078163

Interest Rates, Exchange Rates and Present Value Models of the Current Account

Bergin, Paul R.; Sheffrin, Steven M. - 1998

This paper develops an intertemporal model of the current account that allows for variable interest rates and exchange rates. These additional variables are channels through which external shocks may influence the domestic current account. We test the restrictions imposed by the theory, using...

Persistent link: https://www.econbiz.de/10014079887

Exchange Rates Co-Movement and International Trade

Babii, Aleksandra - 2020

Nominal exchange rates strongly co-move. However, little is known about the economic source of common variation. This paper examines how international trade links nominal exchange rates. First, I document that two countries that trade more intensively with each other have more correlated...

Persistent link: https://www.econbiz.de/10014092887

The Hedging Channel of Exchange Rate Determination

Liao, Gordon; Zhang, Tony - 2022

We document the exchange rate hedging channel that connects country-level measures of net external financial imbalances with exchange rates. In times of market distress, countries with large positive external imbalances (e.g. Japan) experience domestic currency appreciation, and crucially,...

Persistent link: https://www.econbiz.de/10013405506