Financial Liberalization, Currency Substitution, and Investment PDF Download

Author: M. Nureldin Hussain
Publisher:
ISBN:
Category : Currency substitution
Languages : en
Pages : 38

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Abstracts in English and French.

Author: Tafirenyika Sunde
Publisher:
ISBN:
Category : Elections
Languages : en
Pages : 14

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Author:
Publisher:
ISBN:
Category : Elections
Languages : en
Pages : 14

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Author: Andras Koves
Publisher: Routledge
ISBN: 0429702558
Category : Political Science
Languages : en
Pages : 302

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Book Description
This groundbreaking volume combines theories of economic liberalization with a wide variety of case studies from market and socialist economies. Internationally regarded scholars and Eastern European policymakers have collaborated to evaluate the dramatic economic changes taking place throughout the world. The opening essays contribute to the theoretical debate by showing that foreign economic liberalization goes beyond reducing import barriers to policies on investment, financial liberalization, convertability, and export promotion. Case studies compare successful and unsuccessful liberalization attempts world wide. The disintegration of the CMEA and the policy dilemmas facing Central and Eastern Europe are examined in great detail, as the authors explore the pitfalls and opportunities inherent in the transformation from a centrally planned economy. This up-to-date text will be invaluable for courses on the history and transformation of socialist economies, comparative economic systems, and international trade and investment.

Author: Edmar L. Bacha
Publisher: International Monetary Fund
ISBN:
Category : Business & Economics
Languages : en
Pages : 34

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We investigate the role of financial dollarization in the determination of real interest rates in emerging economies. In a simple analytical model, we show that a strategy of "dedollarizing" the economy, if it fails to address fundamental macroeconomic risks, leads to higher domestic real interest rates. We confirm this prediction in an empirical model, but find that the effect is small after controlling for the risks of dilution and default. Brazil provides a natural case study given its low degree of financial dollarization and very high real interest rates. The estimated model is unable to explain the high interest rate levels in the aftermath of Brazil's 1994 inflation stabilization. However, since the adoption in 1999 of inflation targeting and floating exchange rates, Brazil's real interest rates are gradually converging to the model's predicted values. The estimation also shows that further drops in Brazil's real interest rates could be achieved more effectively through improvements in fundamentals that lead to investment-grade status rather than through financial dollarization.

Author: Guillermo A. Calvo
Publisher:
ISBN:
Category : Circular velocity of money
Languages : en
Pages : 46

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Author: Mr.Bart Turtelboom
Publisher: International Monetary Fund
ISBN: 1451939183
Category : Business & Economics
Languages : en
Pages : 46

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This paper undertakes a survey of theoretical considerations and an analysis of the experience of five African countries with interest rate liberalization. Despite substantial progress in monetary policy reforms, liberalization has only partially affected the level and variability of interest rates. Several factors—macroeconomic instability, oligopolistic financial markets, the absence of developed capital markets, as well as the sequencing of the liberalization programs and the asymmetric availability of information—explain the increase in the spread between lending and deposit rates as well as the rather inflexible pattern of interest rates during the transition to a market-based financial system.

Author: Annamaria Kokenyne
Publisher: International Monetary Fund
ISBN: 1455201715
Category : Business & Economics
Languages : en
Pages : 53

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This paper provides a summary of the key policies that encourage dedollarization. It focuses on cases in which the authorities’ intention is to gain greater control of monetary policy and draws on the experiences of countries that have successfully dedollarized. Unlike previous work on the subject, this paper examines both macroeconomic stabilization policies and microeconomic measures, such as prudential regulation of the financial system. This study is also the first attempt to make extensive use of the foreign exchange regulation data reported in the IMF’s Annual Report on Exchange Arrangements and Exchange Restrictions. The main conclusion is that durable dedollarization depends on a credible disinflation plan and specific microeconomic measures.

Author: Mr.Mohsin S. Khan
Publisher: International Monetary Fund
ISBN: 1451931301
Category : Business & Economics
Languages : en
Pages : 40

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This paper examines the relative demands for domestic and foreign currency deposits by residents of developing countries. A dynamic currency substitution model that incorporates forward-looking rational expectations is formulated and then estimated for a group of ten developing countries. The results indicate that the foreign rate of interest and the expected rate of depreciation of the parallel market exchange rate are important factors in the choice between holding domestic money or switching to foreign currency deposits held abroad. From an empirical standpoint, the forward-looking framework adopted here also turns out to be superior to the conventional currency-substitution model.

Author: Mr.Marco Airaudo
Publisher: International Monetary Fund
ISBN: 1475523165
Category : Business & Economics
Languages : en
Pages : 65

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Book Description
We analyze coordination of monetary and exchange rate policy in a two-sector model of a small open economy featuring imperfect substitution between domestic and foreign financial assets. Our central finding is that management of the exchange rate greatly enhances the efficacy of inflation targeting. In a flexible exchange rate system, inflation targeting incurs a high risk of indeterminacy where macroeconomic fluctuations can be driven by self-fulfilling expectations. Moreover, small inflation shocks may escalate into much larger increases in inflation ex post. Both problems disappear when the central bank leans heavily against the wind in a managed float.