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Exchange Rate Policy (exchange + rate_policy)
Selected AbstractsChina's Exchange Rate Policy, Its Current Account Surplus and the Global Imbalances,THE ECONOMIC JOURNAL, Issue 541 2009W. Max Corden This article is stimulated by current criticisms of Chinese exchange rate policy. The concern is really about China's current account surplus. The article discusses the factors that determine the surplus, and the reasons why the surplus increased sharply from 2005. The international implications of China's surplus and growth are discussed, and how it has affected the world real interest rate, and through that the US current account deficit. The surplus has had various international relative price effects, which have produced both gainers and losers. Finally, the surplus played only a small part in determining the world credit crisis. [source] Managed Floating in Australia,ECONOMIC PAPERS: A JOURNAL OF APPLIED ECONOMICS AND POLICY, Issue 4 2009Shawn Chen-Yu Leu F31; F41 This paper evaluates the level of managed floating and the exchange rate policy in Australia during the officially floating period from 1984 to 2004. We construct index measures of exchange market pressure and foreign exchange intervention using a small open economy monetary model. The estimation uses the Johansen cointegration method as the structural macroeconomic model is assumed to represent long-run equilibrium relationships. We find that the RBA mainly implemented leaning-against-the-wind exchange rate policy that aimed at guiding the exchange rate back to the equilibrium value while reducing the variability of the dynamic adjustment path. [source] Civil Servants, Economic Ideas, and Economic Policies: Lessons from ItalyGOVERNANCE, Issue 4 2005LUCIA QUAGLIA Building on theoretically oriented and empirically grounded research on two key macroeconomic institutions in Italy, this article explains how and why civil servants can engineer major policy changes, making a difference in a country's trajectory. Italy provides a challenging testing ground for this kind of analysis, as it is generally portrayed as a highly politicized system in which political parties and politicians fully control public policies. Three general lessons can be learned, the first being that the role of civil servants in changing modes of economic governance depends on the resources that they master in the system in which they operate. "Intangible assets" are of primary importance in complex and perceived technical policies, such as monetary and exchange rate policy, which have high potential for "technocratic capture." Second, in these policies, certain intangible assets, such as specific bodies of economic knowledge or policy paradigms, have a considerable impact on policy making. Third, besides interactions in international fora, the professional training of civil servants is a mainstream way through which economic policy beliefs circulate and gain currency, laying the foundations for policy shifts. By highlighting the importance of the intangible assets of macroeconomic institutions, this research makes an unorthodox contribution to the primarily economic literature on central bank independence. [source] A Single EU Seat in the IMF?JCMS: JOURNAL OF COMMON MARKET STUDIES, Issue 2 2004Lorenzo Bini Smaghi This article examines the rationale for consolidating EU Member States' position in the International Monetary Fund (IMF). Although a substantial amount of co-ordination already takes place, particularly on issues related to the euro area and the single monetary and exchange rate policy, co-operation between EU countries in the IMF remains a relatively new phenomenon and divergences still prevail. The current institutional set-up, whereby the 15 EU countries are spread in nine constituencies, undermines effectiveness. Al though there is scope for further improving co-operation, there are natural limits to what can be achieved within the existing co-operation frame work. A single EU constituency would enable EU Member States to have a strong impact on IMF policies, potentially as strong as that of the US. However, this may not be an objective for all EU countries in the current conjuncture. [source] Second Generation Models of Currency CrisesJOURNAL OF ECONOMIC SURVEYS, Issue 5 2001Jesper Rangvid Until the beginning of the 1990s, currency crises were typically analyzed within the framework of a generation of models that assumed that the foreign exchange reserves of a country that was running a fixed exchange rate policy were falling (because the government was running a deficit on its budget that was financed by printing money). When the foreign exchange reserves reached a lower bound, a speculative attack on the fixed exchange rate was launched. Today, this theory is no longer the benchmark when explaining the occurrence of a currency crisis. Actually, a new generation of models that seeks to take explicitly into account the costs and benefits associated with the maintenance of a fixed exchange rate has emerged. This paper surveys these ,second generation models of currency crises'. This generation of models emphasizes that it is an endogenous decision if a government chooses to abandon a policy of fixed exchange rates. The survey pays special attention to the fact that the second generation of currency crises models often generates multiple equilibria for the rate of devaluation given one state of the economic fundamentals. A currency crisis can thus occur even if no secular trend in economic fundamentals can be identified, as in recent currency crises. [source] External Constraints on Monetary Policy and the Financial AcceleratorJOURNAL OF MONEY, CREDIT AND BANKING, Issue 2-3 2007MARK GERTLER financial crises; exchange rate policy We develop a small open economy macroeconomic model where financial conditions influence aggregate behavior. Our goal is to explore the connection between the exchange rate regime and financial distress. We first show that a calibrated version of the model captures well the behavior of the Korean economy during its financial crisis period of 1997,98. In particular, the model accounts for the sharp increase in lending rates and the large drop in output, employment, investment, and measured productivity. The financial market frictions play an important role, further, explaining roughly half the decline in overall economic activity. We then perform some counterfactual exercises to illustrate how the fixed exchange rate regime likely exacerbated the crisis by tying the hands of monetary policy. [source] Foreign Currency Exposure in the Department of DefensePUBLIC BUDGETING AND FINANCE, Issue 4 2000Gerald M. Groshek The Department of Defense (DoD) incurs numerous costs denominated in foreign currencies in fulfilling U.S. alliance and security agreements overseas. Between fiscal years 1993 and 1997, the DoD expended over $10.4 billion in foreign currencies to operate and maintain its overseas facilities, and estimates for fiscal years 1998 and 1999 are $5.4 billion. In line with the government's general, risk-neutral approach to financial risk, the DoD makes no attempt to control its foreign exchange exposure against currency fluctuations. As such, there are inevitable differences in amounts budgeted to fund the DoD's overseas operations and amounts subsequently required to pay them. This paper examines the implications of DoD foreign exchange rate policy and applies an alternative approach to foreign exchange rate risk,one more in line with private-sector practices and overall efforts to reform government operations. The results indicate that forward contracts would inject greater certainty into the budgeting and administration of these programs and might release limited defense funds for use elsewhere. [source] MONETARY POLICY IN A SMALL OPEN ECONOMY: THE CASE OF MALAYSIATHE DEVELOPING ECONOMIES, Issue 4 2007So UMEZAKI E42; E58; F41 This paper provides a case study to characterize the monetary policy regime in Malaysia, from a medium- and long-term perspective. Specifically, we ask how the Central Bank of Malaysia, Bank Negara Malaysia (BNM), has structured its monetary policy regime, and how it has conducted monetary and exchange rate policy under the regime. By conducting three empirical analyses, we characterize the monetary and exchange rate policy regime in Malaysia by three intermediate solutions on three vectors: the degree of autonomy in monetary policy, the degree of variability of the exchange rate, and the degree of capital mobility. [source] China's Exchange Rate Policy, Its Current Account Surplus and the Global Imbalances,THE ECONOMIC JOURNAL, Issue 541 2009W. Max Corden This article is stimulated by current criticisms of Chinese exchange rate policy. The concern is really about China's current account surplus. The article discusses the factors that determine the surplus, and the reasons why the surplus increased sharply from 2005. The international implications of China's surplus and growth are discussed, and how it has affected the world real interest rate, and through that the US current account deficit. The surplus has had various international relative price effects, which have produced both gainers and losers. Finally, the surplus played only a small part in determining the world credit crisis. [source] Mad Cows and Mad Money: Problems of Risk in the Making and Understanding of Policy1BRITISH JOURNAL OF POLITICS & INTERNATIONAL RELATIONS, Issue 3 2004Martin J. Smith Risk is now being widely used both as a way of understanding policy and decision-making, and as a way of making decisions. However, there is little agreement on how risk is defined. For some risk is objective and measurable, while for others risk is subjective. What this article demonstrates is that because risk is a contested concept, it is extremely difficult to use it either as a tool for analysing government or for making decisions. In their different ways both scientists and social theorists assume an objectivity to risk. However, risk is not objective but contingent, and depends on decisions that are often related to issues of power. Consequently both governments and analysts are caught between matching subjective and political notions of risk with objective risk assessment. Two case studies are used, BSE in cows and British exchange rate policy, to demonstrate the difficulties in using risk as a way of analysing the policy process and for making decisions. [source] Is the Export-led Growth Hypothesis Enough to Account for China's Growth?CHINA AND WORLD ECONOMY, Issue 4 2010María Jesús Herrerias F43; O40; O47; O53 Abstract One of the missing pieces preventing us from understanding recent Chinese economic development is the role played by openness and capital accumulation in this process. The question is whether the sharp economic growth that the Chinese economy has experienced is another case of export-led growth due to the open-door policy or whether, on the contrary, this growth has been caused by high domestic savings and investment rates (and the consequent capital accumulation). To answer this question, we employed an empirical framework of the cointegrated vector autoregressive model. The empirical results show that both investment (in physical capital and R&D) and exports, as well as the exchange rate policy, are relevant factors in explaining China's long-run economic growth over the past 4 decades. [source] Chinese Yuan after Chinese Exchange Rate System ReformCHINA AND WORLD ECONOMY, Issue 6 2006Eiji Ogawa F31; F33 Abstract In this paper, the actual exchange rate policy conducted by the Chinese government after the Chinese exchange rate system reform on 21 July 2005 is investigated. Also, the long-run effect is investigated, including the Balassa-Samuelson effect on the Chinese yuan. It was found that the Chinese government generated a statistically significant but small change in exchange rate policy during the sample period until 25 January 2006. It was not identified that the Chinese monetary authority is adopting the currency basket system because the change is too small in the economic sense. It is indicated that the Chinese government should take account of the productivity growth of countries composing the currency basket in order to operate a currency basket regime. (Edited by Xiaoming Feng) [source] | |||||||||||||