Do Exchange Rates Move to Address International Macroeconomic Imbalances? PDF Download

Author: Matthew B. Canzoneri
Publisher:
ISBN:
Category : Economic stabilization
Languages : en
Pages : 60

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Author: Matthew B. Canzoneri
Publisher:
ISBN:
Category :
Languages : en
Pages : 25

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Author: A. Makin
Publisher: Springer
ISBN: 0230250750
Category : Business & Economics
Languages : en
Pages : 214

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This book analyzes key international monetary issues from a macro-foundations perspective. It proposes novel frameworks to interpret macroeconomic and financial linkages for globally integrated economies, examining global imbalances, exchange rates, interest rates, international capital flows, inflation, foreign and public debt.

Author: Ms.Emine Boz
Publisher: International Monetary Fund
ISBN: 148432885X
Category : Business & Economics
Languages : en
Pages : 66

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Book Description
We document that the U.S. dollar exchange rate drives global trade prices and volumes. Using a newly constructed data set of bilateral price and volume indices for more than 2,500 country pairs, we establish the following facts: 1) The dollar exchange rate quantitatively dominates the bilateral exchange rate in price pass-through and trade elasticity regressions. U.S. monetary policy induced dollar fluctuations have high pass-through into bilateral import prices. 2) Bilateral non-commodities terms of trade are essentially uncorrelated with bilateral exchange rates. 3) The strength of the U.S. dollar is a key predictor of rest-of-world aggregate trade volume and consumer/producer price inflation. A 1 percent U.S. dollar appreciation against all other currencies in the world predicts a 0.6–0.8 percent decline within a year in the volume of total trade between countries in the rest of the world, controlling for the global business cycle. 4) Using a novel Bayesian semiparametric hierarchical panel data model, we estimate that the importing country’s share of imports invoiced in dollars explains 15 percent of the variance of dollar pass-through/elasticity across country pairs. Our findings strongly support the dominant currency paradigm as opposed to the traditional Mundell-Fleming pricing paradigms.

Author: Rupa Duttagupta
Publisher: International Monetary Fund
ISBN:
Category : Business & Economics
Languages : en
Pages : 36

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A growing number of countries are adopting flexible exchange rate regimes because flexibility offers more protection against external shocks and greater monetary independence. Other countries have made the transition under disorderly conditions, with the sharp depreciation of their currency during a crisis. Regardless of the reason for adopting a flexible exchange rate, a successful transition depends on the effective management of a number of institutional and operational issues. The authors of this Economic Issue describe the necessary ingredients for moving to a flexible regime, as well as the optimal pace and sequencing under different conditions.

Author: Mr.Richard C. Bart
Publisher: International Monetary Fund
ISBN: 9781557753649
Category : Business & Economics
Languages : en
Pages : 316

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External sector policies and exchange rate policy are central to a country's economic performance and to the IMF's surveillance functions. The papers in this book, edited by Richard Barth and Chorng-Huey Wong, were presented at a seminar on Exchange Rate Policy in Developing and Transition Economies held by the IMF Institute. They analyze choices of exchange rate regimes, issues affecting management of exchange regimes, and specific types of regimes, including case studies from the former Soviet Union, Africa, Asia, and Latin America.

Author: Mr.Philip R. Lane
Publisher: International Monetary Fund
ISBN: 149836361X
Category : Business & Economics
Languages : en
Pages : 45

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This paper has two objectives. First, it reviews the recent dynamics of global imbalances (both “flow” and “stock” imbalances), with a special focus on the shifting position of Latin America in the global distribution. Second, it examines the cross-country variation in external adjustment over 2008-2012. In particular, it shows how pre-crisis external imbalances have strong predictive power for post-crisis macroeconomic outcomes, allowing for variation across different exchange rate regimes. We emphasize that the bulk of external adjustment has taken the form of “expenditure reduction”, with “expenditure switching” only playing a limited role.

Author: Abdurrahman Arum Rahman
Publisher: Global Currency Initiative
ISBN:
Category : Business & Economics
Languages : en
Pages : 478

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Book Description
The US Dollar and the Euro are not real international currencies, but the currencies of certain countries (US) and region (Eurozone) that are "adopted" to become international currencies. This causes our global monetary and financial system to be asymmetrical. Some countries print money while others buy them. Consequently, the US and the Euro Area can buy anything from all countries in the world just by printing money from paper. They buy gold with paper. While all other countries are the opposite; they sell anything to get “paper money”. They buy paper with gold. This asymmetrical global monetary and financial system creates a very expensive cost to the world economy; exchange rate costs and fluctuations that reach hundreds of billions of dollars every year; cumulative foreign exchange reserves worth a dozen of trillions of dollars; two-thirds of countries in the world are trapped in foreign debt that cannot be paid; mass-and-cold trade wars involving all countries in the world and lasting for decades gave birth to the phenomenon of "race to the bottom" and made most developing countries trapped in the middle income (MIT); persistent global imbalances that continue to grow and become a fertile ground for monetary crisis that occurs periodically throughout the world. The Global Currency Initiative pioneered a global monetary model that is fully symmetrical and at the same time democratic. The model name is “organic global monetary” (OGM). OGM is an international currency system developed jointly by all countries in the world, or member countries and is part of their respective national currencies. Organic currency is only used for international transactions between member countries; while domestic transactions continue to use the national currency. The relationship between international currency and nationals is organic (part of) and hybrid (interconvertible). The exchange rate between organic and national currencies uses an auto-balancing so that it follows the true economic fundamentals. The organic model is an international monetary system that is natural, elegant, and very comprehensive, provides international currencies “free of charge” to all member countries, does not require foreign exchange reserves, eliminates exchange rate cost and fluctuations, makes “zero-depreciated” international currencies, eliminates foreign debt dependence, abolishing trade wars at all levels, releases countries from the middle-income trap (MIT); eliminates global imbalances, and roots out the potentials for monetary crisis. The organic model uses a fully flexible exchange rate system; therefore, it doesn't require economic integration. Thus, all countries in the world may join, without overhauling the monetary system, without losing the national currency and monetary-economic sovereignty. The organic model can also start on a small scale like the ASEAN region, South Asian, East Asian, Middle East, Latin America, East Africa, West, and Central, and many others. It may also start in several connected-regions or multi-regions. Once formed, the organic union may open to all countries in the world regardless of regional differences, income levels, economic systems, and others. All countries may join without exception. Since then, the world has a fully democratic and symmetrical alternative monetary system. Each country in the world is free to choose whether to join the organic monetary system or stay with the current system. Because the essence of democracy is to provide choices. This book is the second edition with some improvement from the first edition entitled "Global Currency Initiative". In this edition, we enhance the theory and academic. While on the other hand we still use a very simple language so that it is easily understandable by the general public; because the global currency is a common interest that everyone needs to know.

Author: Mr.Kenneth Rogoff
Publisher: International Monetary Fund
ISBN: 1451875843
Category : Business & Economics
Languages : en
Pages : 85

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Using recent advances in the classification of exchange rate regimes, this paper finds no support for the popular bipolar view that countries will tend over time to move to the polar extremes of free float or rigid peg. Rather, intermediate regimes have shown remarkable durability. The analysis suggests that as economies mature, the value of exchange rate flexibility rises. For countries at a relatively early stage of financial development and integration, fixed or relatively rigid regimes appear to offer some anti-inflation credibility gain without compromising growth objectives. As countries develop economically and institutionally, there appear to be considerable benefits to more flexible regimes. For developed countries that are not in a currency union, relatively flexible exchange rate regimes appear to offer higher growth without any cost in credibility.

Author: Steven Vincent Dunaway
Publisher: Council on Foreign Relations
ISBN: 0876094280
Category : Business & Economics
Languages : en
Pages : 56

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Book Description
Crafting stimulus packages and financial bailouts to address immediate problems has for many reasons been a priority for policymakers. In this Council Special Report, however, Steven Dunaway argues that policymakers must go beyond these steps and tackle one of the root causes of today's crisis: imbalances between savings and investment in major countries. The report analyzes the nature of these imbalances, which occur when some countries, such as the United States, run large current account (essentially trade) deficits while others, such as China, maintain large surpluses. Dunaway identifies three features of the international financial system that have allowed the imbalances to persist, features that involve both floating and managed exchange rates as well as the issuance of reserve assets. In particular, he notes that the United States' status as an issuer of such assets has enabled it to finance a current account deficit. The report then prescribes a variety of steps to address global imbalances. Beyond stimulus packages around the world, it urges measures to raise savings (principally government savings) in the United States, reform labor and product markets in Europe and Japan to increase competition and flexibility, and boost domestic consumption in China. Finally, the report advocates improving International Monetary Fund (IMF) surveillance of member states' economic policies by reducing the role of the Fund's executive board and depoliticizing the selection of its senior management.