Foreign Exchange Intervention A Dataset Of Public Data And Proxies

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Foreign Exchange Intervention A Dataset Of Public Data And Proxies

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Author : Gustavo Adler
language : en
Publisher: International Monetary Fund
Release Date : 2021-02-19

Foreign Exchange Intervention A Dataset Of Public Data And Proxies written by Gustavo Adler 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 2021-02-19 with Business & Economics categories.

Foreign exchange intervention (FXI) is a highly debated topic. Yet, comprehensive and comparable data on FXI is hard to find. This paper provides a new dataset of FXI covering a large number of countries over the period 2000-20 at monthly and quarterly frequencies. It includes publicly available data for about 40 countries and carefully constructed proxies for 122 countries. Proxies are focused on both spot and derivative transactions that alter the central bank’s foreign currency position and account for a wide range of central bank operations, including vis-à-vis residents, the first proxy to do so to our knowledge. The paper discusses the merits of the new proxy relative to coarser measures traditionally used like the change in reserves, and potential definitional differences with published data. The paper also presents stylized facts using our newly constructed FXI proxies.

Shocks And Capital Flows

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Author : Mr. Gaston Gelos
language : en
Publisher: International Monetary Fund
Release Date : 2023-10-27

Shocks And Capital Flows written by Mr. Gaston Gelos 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 2023-10-27 with Business & Economics categories.

The high exposure of open economies to shocks makes them particularly vulnerable to volatile capital flows and advanced economy monetary policy spillovers. How should and do domestic policymakers respond? The traditional answer has been to use flexible exchange rates as a shock absorber. But flexible exchange rates may not offer full insulation when financial markets are imperfect. This book brings together recent empirical studies at the International Monetary Fund (IMF) on the effectiveness of different tools in responding to such shocks. The 18 chapters in this volume provide a rich background to the recently launched Integrated Policy Framework by the IMF. They comprise assessments of countries’ actual use of different tools, as well as in-depth evaluations of their effectiveness and side effects, covering macroprudential policies, monetary policy, foreign-exchange intervention, and capital flow management policies. Many of the studies involve new data and methods to tackle the inherently difficult problems in identifying and comparing the effects of policies under different circumstances. As a result, the volume offers the reader a comprehensive, in-depth coverage of the policy-oriented empirical research that has informed the development of a new way of thinking about open-economy macroeconomics at the IMF.

Renminbi From Marketization To Internationalization

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Author : Zhongxia Jin
language : en
Publisher: Routledge
Release Date : 2022-05-12

Renminbi From Marketization To Internationalization written by Zhongxia Jin and has been published by Routledge this book supported file pdf, txt, epub, kindle and other format this book has been release on 2022-05-12 with Business & Economics categories.

This study looks into the significance of a floating exchange rate regime, further development of the foreign exchange derivatives market, and concurrent internationalization of the Renminbi (RMB) for a resilient, open, and growing Chinese economy. The first chapter analyzes the macroeconomic impact of foreign exchange intervention based on empirical studies on 26 economies, explaining why most countries favor a floating exchange rate regime under the existing international monetary system. The second chapter discusses the macroeconomic and microeconomic conditions that would facilitate a successful transition to a floating exchange rate. The final two chapters discuss the importance of further developing the foreign exchange derivatives market in China and explores paths toward further opening-up of the capital market and internationalization of the RMB under a floating exchange rate. Based on the authors’ decades of reflections and systematic analysis on real cases both in China and abroad, the title sheds lights on China’s exchange rate issues and research on exchange rate policy. This book will be an essential reference for scholars, students, professionals, and policymakers interested in exchange rate, currency internationalization, the financial market, especially the derivatives market, and the Chinese economy.

Why Follow The Fed Monetary Policy In Times Of Us Tightening

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Author : Gonzalo Huertas
language : en
Publisher: International Monetary Fund
Release Date : 2022-12-09

Why Follow The Fed Monetary Policy In Times Of Us Tightening written by Gonzalo Huertas 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 2022-12-09 with Business & Economics categories.

I conduct interviews with 32 Central Bankers from Emerging Markets and present five unifying themes that explain their behavior when reacting to a U.S. monetary tightening. I then estimate the impulse response functions of their two main monetary tools, the policy rate and foreign exchange interventions, to an increase in the U.S. rate, using the answers from the interviews as a guide for the best econometric specification. I find that most Central Banks react to a U.S. tightening by raising domestic rates, regardless of the exchange rate regime, but their reasons for doing so vary – from controlling inflation to preventing capital outflows.

Oecd Economic Surveys Switzerland 2024

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Author : OECD
language : en
Publisher: OECD Publishing
Release Date : 2024-03-14

Oecd Economic Surveys Switzerland 2024 written by OECD and has been published by OECD Publishing this book supported file pdf, txt, epub, kindle and other format this book has been release on 2024-03-14 with categories.

Switzerland has proved resilient through the pandemic, geopolitical turmoil and reverberations in energy markets. Unemployment and inflation are low, and living standards are among the highest in the OECD. This is reinforced by a dynamic market-based economy, highly skilled workforce and prudent macroeconomic policies. Yet, slowing growth amid continued price pressures pose challenges. A tight monetary policy is necessary to ensure that inflation remains durably within the central bank’s target range. Although a broadly neutral fiscal stance is warranted in the short term, longer-term fiscal pressures call for structural reform to counter rising cost of ageing and to support the green transition. S

An Estimated Dsge Model For Integrated Policy Analysis

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Author : Kaili Chen
language : en
Publisher: International Monetary Fund
Release Date : 2023-06-30

An Estimated Dsge Model For Integrated Policy Analysis written by Kaili Chen 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 2023-06-30 with Business & Economics categories.

We estimate a New Keynesian small open economy model which allows for foreign exchange (FX) market frictions and a potential role for FX interventions for a large set of emerging market economies (EMEs) and some inflation targeting (IT) advanced economy (AE) countries serving as a control group. Next, we use the estimated model to examine the empirical support for the view that interest rate policy may not be sufficient to stabilize output and inflation following capital outflow shocks, and the extent to which FX interventions (FXI) can improve policy tradeoffs. Our results reveal significant structural differences between AEs and EMEs—in particular FX market depth—leading to different transmission of capital outflow shocks which justifies occasional use of FXI in some EMEs in certain situations. Our analysis also highlights the critical importance of accounting for the endogeneity of FXI behavior when assessing FX market depth and policy tradeoffs associated with volatile capital flows in past episodes.

Dollar Exchange Rate Volatility And Productivity Growth In Emerging Markets Evidence From Firm Level Data

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Author : Kodjovi M. Eklou
language : en
Publisher: International Monetary Fund
Release Date : 2023-05-26

Dollar Exchange Rate Volatility And Productivity Growth In Emerging Markets Evidence From Firm Level Data written by Kodjovi M. Eklou 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 2023-05-26 with Business & Economics categories.

This paper examines the impact of Dollar exchange rate volatility on firm productivity in Emerging Markets economies (EMs). Using firm level data covering 16 EMs over the period 1998 -2019, the paper shows that dollar exchange rate volatility reduces firm productivity growth. Exploring channels, its finds that the results are driven by countries with low level of financial development, high dollar invoicing, high bilateral trade with the US, high collective bargaining coverage and open capital account. Exploring the role of policy, it finds that Foreign Exchange Interventions (FXI) dampen this impact on firm productivty. Further, exploiting firm level data, the paper shows that dollar exchange rate volatility operates also through the financial friction channel, reducing contemporaneous investments, especially at firms with low liquidity buffers and weak balance sheet (high leverage). The role of financial frictions is confirmed through the finding that younger firms, more likely to face financial constraints, are also found to be more vulnerable to dollar exchange rate volatility. In addition, we also find evidence of a large and persistent effect on firms with highly irreversible investment, lending support for the real option channel of uncertainty on the dollar exchange rate. These findings are robust to a battery of tests, including controlling for uncertainty, financial crises and using an instrumental variable strategy exploiting US monetary policy shocks as an exogenous source of variation in dollar exchange rate volatility.

Philippines

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Author : International Monetary
language : en
Publisher: International Monetary Fund
Release Date : 2022-12-15

Philippines written by International Monetary 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 2022-12-15 with Business & Economics categories.

Philippines: Selected Issues

Escaping The Financial Dollarization Trap The Role Of Foreign Exchange Intervention

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Author : Paul Castillo
language : en
Publisher: International Monetary Fund
Release Date : 2024-06-21

Escaping The Financial Dollarization Trap The Role Of Foreign Exchange Intervention written by Paul Castillo 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 2024-06-21 with categories.

Financial dollarization is considered a source of macroeconomic instability in many emerging economies. Dollarization constrains the ability of central banks to stimulate output during economic downturns. In contrast to the conventional monetary transmission mechanism, a monetary policy loosening in a dollarized economy leads to a currency depreciation, adverse balance sheet effects, and a contraction in investment and output growth. In this paper we evaluate the role of foreign exchange reserves in facilitating macroeconomic stabilization in a financially dollarized economy. We first show empirically that foreign exchange intervention in response to capital outflows can largely reduce the volatility of output and the real exchange rate in dollarized economies. We then develop a small open economy model with foreign currency debt and balance sheets effects. Our quantitative model shows that an active foreign exchange intervention policy is sufficient for offsetting the output volatility associated with financial dollarization. These results can explain the prevalence of low macroeconomic volatility in some dollarized economies (Christiano et al., 2021) and they highlight the role of foreign exchange reserves in reducing the welfare costs of dollarization.

External Shocks Policies And Tail Shifts In Real Exchange Rates

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Author : Mr. Nicolas E Magud
language : en
Publisher: International Monetary Fund
Release Date : 2023-06-23

External Shocks Policies And Tail Shifts In Real Exchange Rates written by Mr. Nicolas E Magud 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 2023-06-23 with Business & Economics categories.

We use panel quantile regressions to study extreme (rather than average) movements in the distribution of the real effective exchange rate (REER) of small open economies. We document that global uncertainty (VIX) and global financial conditions (U.S. monetary policy) shocks have a strong impact on the distribution of the REER changes, with larger impacts in the tails of the distribution, and especially in economies with shallower FX markets, lower central bank credibility, and higher credit risk (i.e., weaker macro fundamentals). Foreign exchange intervention (FXI) partially offsets the impact of these shocks, especially in the left tail (large depreciations) and particularly in economies with weaker fundamentals but, more importantly, when FXI is used sporadically. Thus, our results highlight the importance of deepening FX markets, improving central bank credibility, and strengthening macro fundamentals against the potential dynamic trade-offs of overreliance on a policy that would exacerbate the previously mentioned frictions. While our results point to low effectiveness of capital flow management in preventing large REER movements, they seem to enable more impactful foreign exchange intervention in the immediate aftermath of shocks.