Fiscal Policy The Real Exchange Rate And Commodity Prices
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Fiscal Policy The Real Exchange Rate And Commodity Prices
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Author : Ms.Carmen Reinhart
language : en
Publisher: International Monetary Fund
Release Date : 1990-10-01
Fiscal Policy The Real Exchange Rate And Commodity Prices written by Ms.Carmen Reinhart and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 1990-10-01 with Business & Economics categories.
The role of the international commodity market in transmitting disturbances is considered in a model that incorporates commodities as an input in production. The analysis employs a three-country framework: a liquidity-constrained commodity supplier and two industrial countries that import the commodity, export differentiated manufactured goods and hold the outstanding debt of the commodity exporter. In this setting the impact of changes in fiscal policy, commodity supplies, and the real interest rate are assessed. Particular attention is paid to the responses of the real exchange rate, commodity prices, and the international distribution of debt to the various shocks.
Fiscal Policy The Real Exchange Rate And Commodity Prices
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Author : Carmen M. Reinhart
language : en
Publisher:
Release Date : 2006
Fiscal Policy The Real Exchange Rate And Commodity Prices written by Carmen M. Reinhart and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2006 with categories.
The role of the international commodity market in transmitting disturbances is considered in a model that incorporates commodities as an input in production. The analysis employs a three-country framework: a liquidity-constrained commodity supplier and two industrial countries that import the commodity, export differentiated manufactured goods and hold the outstanding debt of the commodity exporter. In this setting the impact of changes in fiscal policy, commodity supplies, and the real interest rate are assessed. Particular attention is paid to the responses of the real exchange rate, commodity prices, and the international distribution of debt to the various shocks.
Real Exchange Rates And Commodity Prices In Neoclassical Model
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Author : International Monetary Fund
language : en
Publisher: International Monetary Fund
Release Date : 1988-06-30
Real Exchange Rates And Commodity Prices In Neoclassical Model written by International Monetary Fund and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 1988-06-30 with Business & Economics categories.
This paper presents a neoclassical model that explains the observed empirical relationship between government spending and world commodity supplies and the real exchange rate and real commodity prices. It is shown that fiscal expansion and increasing world commodity supplies simultaneously lead to an appreciation of the real exchange rate and a decline in relative commodity prices. This structural model is estimated and its forecasting performance is compared to a variety of models. We find that theory and structure help in predicting commodity prices, although not the exchange rate, and that predictive ability increases as the forecast horizon is lengthened. MASTER FILES ROOM C-130 001
World Food Prices The Terms Of Trade Real Exchange Rate Nexus And Monetary Policy
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Author : Mr.Luis Catão
language : en
Publisher: International Monetary Fund
Release Date : 2013-05-17
World Food Prices The Terms Of Trade Real Exchange Rate Nexus And Monetary Policy written by Mr.Luis Catão and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013-05-17 with Business & Economics categories.
How should monetary policy respond to large fluctuations in world food prices? We study this question in an open economy model in which imported food has a larger weight in domestic consumption than abroad and international risk sharing can be imperfect. A key novelty is that the real exchange rate and the terms of trade can move in opposite directions in response to world food price shocks. This exacerbates the policy trade-off between stabilizing output prices vis a vis the real exchange rate, to an extent that depends on risk sharing and the price elasticity of exports. Under perfect risk sharing, targeting the headline CPI welfare-dominates targeting the PPI if the variance of food price shocks is not too small and the export price elasticity is realistically high. In such a case, however, targeting forecast CPI is a superior choice. With incomplete risk sharing, PPI targeting is clearly a winner.
Commodity Prices And Markets
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Author : Takatoshi Ito
language : en
Publisher: University of Chicago Press
Release Date : 2011-02-15
Commodity Prices And Markets written by Takatoshi Ito and has been published by University of Chicago Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 2011-02-15 with Business & Economics categories.
Fluctuations of commodity prices, most notably of oil, capture considerable attention and have been tied to important economic effects, such as inflation and low rates of economic growth. Commodity Prices and Markets advances our understanding of the consequences of these fluctuations, providing both general analysis and a particular focus on the countries of the Pacific Rim. The volume addresses three distinct subjects: the difficulties in forecasting commodity prices, the effects of exogenous commodity price shocks on the domestic economy, and the relationship between price shocks and monetary policy. The ability to forecast commodity prices is difficult but of great importance to businesses and governments, and this volume will be invaluable to professionals and policy makers interested in the field.
Fiscal Policies And Real Exchange Rates In The World Economy
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Author : Jacob A. Frenkel
language : en
Publisher:
Release Date : 1986
Fiscal Policies And Real Exchange Rates In The World Economy written by Jacob A. Frenkel and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1986 with Budget deficits categories.
This paper examines the effects of fiscal policies on the evolution of real rates of interest and real exchange rates in the interdependent world economy. We construct an analytical framework suitable for a detailed examination of the various channels through which these variables are influenced by government spending and by tax policies. The analytical framework employs a general equilibrium approach highlighting the roles played by wealth effects and by temporal and intertemporal substitution effects. The general principle illustrated by the analysis of the dynamic effects of budget deficits is that the consequences of temporary tax policies stretch beyond the period during which the temporary policies are in effect. The counterpart to these dynamic implications is the rise in the economy's external debt induced by the budget deficit the service of which stretches into the indefinite future. By series of examples, allowing for both distortionary and non-distortionary taxes and for various patterns of government spending, it is shown that the quantitative and qualitative effects of fiscal policies on real exchange rates, real interest rates, debt accumulation and the like depend critically on the commodity composition of government spending and its intertemporal allocations on the one hand, and on the details of government debt issue and tax structure, including the timing of taxes and borrowing and the types of taxes used to finance the budget, on the other hand.
Global Commodity Prices Monetary Transmission And Exchange Rate Pass Through In The Pacific Islands
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Author : Mr.Shanaka J. Peiris
language : en
Publisher: International Monetary Fund
Release Date : 2012-07-01
Global Commodity Prices Monetary Transmission And Exchange Rate Pass Through In The Pacific Islands written by Mr.Shanaka J. Peiris and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2012-07-01 with Business & Economics categories.
Pacific Islands countries are vulnerable to commodity price shocks, and this poses challenges to monetary policy. The high degree of exchange rate pass-through to headline inflation and the weak monetary transmission mechanism in PICs suggest a greater efficacy of exchange rate changes in affecting inflation rather than monetary policy. To assess the tradeoff between the use of the exchange rate and monetary policy in macroeconomic stabilization, we employ a model-based approach to examine the optimal policy in response to the historical distribution of exogenous shocks in a Pacific Island (Tonga). The empirical evidence and model simulations tilt in the favor of exchange rate policy given the close relationship between exchange rate changes and headline inflation and the low interest rate sensitivity of aggregate demand.
Dollars Deficits Trade
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Author : James A. Dorn
language : en
Publisher: Springer Science & Business Media
Release Date : 2013-11-11
Dollars Deficits Trade written by James A. Dorn and has been published by Springer Science & Business Media this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013-11-11 with Business & Economics categories.
The essays in this volume are timelyand provocative. They address the key issues of the changing world economy and consider the implications ofthe erosion ofthe rule oflaw that has occurred both domestically and internationally to an increasing degree over the past halfcentury. The debates over the role of the dollar in the international econ omy, the future shape ofthe international monetary system and the exchange rate regime, the significance ofthe U.S. twin deficits, and the rise of nontariffbarriers to world trade deserve serious attention. Atthe bottom ofthese debates lie differing conceptions ofeconomic policy and the role of government in a free society. Adam Smith's vision ofa limited democracy operating to protect persons and prop erty has been increasinglyreplaced by a vision ofapaternalistic state that is designed to protect special interests at the expense of the larger society. Many of the contributors to this volume point to the lack oflong-run rules designed to promote sound money, fiscal integ rity, and open markets asthe fundamental flawofmodern democratic governments. Although the authors disagree on the specific rules to adopt, the consensus is that a constitutional perspective is needed to ensure astable worldorder. Moreover, since such aperspective must bedeveloped at home before it can spread among nations, the search for optimal international policy coordination is generally seen as misguided. Many ofthe essays in this volume were initially presented at the Cato Institute's Sixth Annual Monetary Conference held in Wash ington, D.C., February 25-26, 1988.
Boom Bust Cycle Asymmetrical Fiscal Response And The Dutch Disease
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Author : Mr.Rabah Arezki
language : en
Publisher: International Monetary Fund
Release Date : 2010-04-01
Boom Bust Cycle Asymmetrical Fiscal Response And The Dutch Disease written by Mr.Rabah Arezki and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2010-04-01 with Business & Economics categories.
We examine the behavior of expenditure policy during boom-bust in commodity price cycles, and its implication for real exchange rate movements. To do so, we introduce a Dutch disease model with downward rigidities in government spending to revenue shock. This model leads to a decoupling between real exchange rate and commodity price movement during busts. We test our model's theoretical predictions and underlying assumptions using panel data for 32 oil-producing countries over the period 1992 to 2009. Results are threefold. First, we find that change in current spending have a stronger impact on the change in real exchange rate compared to capital spending. Second, we find that current spending is downwardly sticky, but increases in boom time, and conversely for capital spending. Third, we find limited evidence that fiscal rules have helped reduce the degree of responsiveness of current spending during booms. In contrast, we find evidence that fiscal rules are associated with a significant reduction in capital expenditure during busts while responsiveness to boosts is more muted. This raises concerns about potential adverse consequences of this asymmetry on economic performance in oil-producing countries.
The Adjustment To Commodity Price Shocks In Chile Colombia And Peru
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Author : Mr.Francisco Roch
language : en
Publisher: International Monetary Fund
Release Date : 2017-09-29
The Adjustment To Commodity Price Shocks In Chile Colombia And Peru written by Mr.Francisco Roch and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017-09-29 with Business & Economics categories.
This paper presents a comparative analysis of the macroeconomic adjustment in Chile, Colombia, and Peru to commodity terms-of-trade shocks. The study is done in two steps: (i) an analysis of the impulse responses of key macroeconomic variables to terms-of-trade shocks and (ii) an event study of the adjustment to the recent decline in commodity prices. The experiences of these countries highlight the importance of flexible exchange rates to help with the adjustment to lower commodity prices, and staying vigilant in addressing depreciation pressures on inflation through tightening monetary policies. On the fiscal front, evidence shows that greater fiscal space, like in Chile and Peru, gives more room for accommodating terms-of-trade shocks.