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Emerging Market Economies (emerging + market_economy)
Selected AbstractsTesting for Balance Sheet Effects in Emerging Markets: A Non-Crisis Setting,INTERNATIONAL FINANCE, Issue 2 2010Uluc Aysun The literature has established that emerging market economies are better insulated from large external shocks during a financial crisis when they adopt a flexible exchange rate regime. Looking at the strength of firms' balance sheets, this paper shows that the opposite holds true in non-crisis periods. The reason is that balance sheets and thus spending decisions are less affected by external shocks under fixed regimes. This result is obtained through several theoretical and empirical methodologies that are useful for identifying balance sheet effects in a non-crisis setting. Simulations reveal a larger (smaller) output response under flexible regimes when these effects are included (excluded). Although the transmission of foreign interest rate shocks to domestic interest rates is stronger under fixed regimes, it appears the limited effects on balance sheets generate a more muted output response. [source] Financial Contagion in Five Small Open Economies: Does the Exchange Rate Regime Really Matter?INTERNATIONAL FINANCE, Issue 1 2000Zsolt Darvas This paper examines the spillover effects of the global financial crises of 1997,9 on five small open economies with different types of exchange rate regimes: the Czech Republic, Greece, Hungary, Israel and Poland. We found empirical evidence that the regional aspect played a dominant role in the intensity of the spillover effects. We found no empirical evidence that the pressures on exchange rates, interest rates and stock markets were primarily influenced by the exchange rate regime in place. Our findings do not support the commonly held view that flexible regimes are the best choice for small open emerging market economies exposed to volatile capital flows. [source] THE PURCHASING POWER PARITY PERSISTENCE PUZZLE: EVIDENCE FROM BLACK MARKET REAL EXCHANGE RATES,THE MANCHESTER SCHOOL, Issue 4 2008MARIO CERRATO In this paper we analyse the purchasing power parity (PPP) persistence puzzle using a unique data set of black market real exchange rates for 36 emerging market economies and (exact and approximate) median unbiased univariate and panel estimation methods. We construct bootstrap confidence intervals for the half-lives, as well as exact quantiles of the median function for different significance levels using Monte Carlo simulation. Even after accounting for a number of econometric issues, the PPP persistence puzzle is still a striking characteristic of the majority of emerging market countries. However, in a minority of exchange rates, the PPP puzzle is removed. [source] Capital Inflows, Resource Reallocation and the Real Exchange Rate,INTERNATIONAL FINANCE, Issue 2 2008Emmanuel K. K. Lartey A large capital inflow to a developing economy can potentially cause a real exchange rate appreciation that is detrimental to the prospects of its tradable sector; a phenomenon known as the Dutch Disease. I analyse the effects of both the level and share of capital inflow on resource reallocation and real exchange rate movements in a small open economy. I find that there exists a trade-off between resource reallocation and the degree of real exchange rate appreciation. In particular, the less labour the tradable sector loses to the non-tradable sector, the greater is the real exchange rate appreciation. This result is driven by the share of investment accounted for by foreign capital, and suggests that an emerging market economy that adopts a production technique which utilizes a greater share of foreign capital relative to domestic capital will be more susceptible to the Dutch Disease following an increase in capital inflow. The results also imply that a policy designed to minimize real exchange rate appreciation during capital inflow episodes should encompass measures aimed at stabilizing prices of non-tradables. [source] | ||||||||||