Real Effects Of Collapsing Exchange Rate Regimes
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Real Effects Of Collapsing Exchange Rate Regimes
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Author : Patrick N. Osakwe
language : en
Publisher:
Release Date : 1999
Real Effects Of Collapsing Exchange Rate Regimes written by Patrick N. Osakwe and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1999 with Financial crises categories.
Speculative Attacks And Models Of Balance Of Payments Crises
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Author : Mr.Robert P. Flood
language : en
Publisher: International Monetary Fund
Release Date : 1991-10-01
Speculative Attacks And Models Of Balance Of Payments Crises written by Mr.Robert P. Flood 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 1991-10-01 with Business & Economics categories.
This paper reviews recent developments in the theoretical and empirical analysis of balance-of-payments crises. A simple analytical model highlighting the process leading to such crises is first developed. The basic framework is then extended to deal with a variety of issues, such as: alternative post-collapse regimes, uncertainty, real sector effects, external borrowing and capital controls, imperfect asset substitutability, sticky prices, and endogenous policy switches. Empirical evidence on the collapse of exchange rate regimes is also examined, and the major implications of the analysis for macroeconomic policy discussed.
The Collapse Of Exchange Rate Regimes
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Author : George S. Tavlas
language : en
Publisher: Springer Science & Business Media
Release Date : 2012-12-06
The Collapse Of Exchange Rate Regimes written by George S. Tavlas 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 2012-12-06 with Business & Economics categories.
ical) and to self-fulfilling currency crisis, respectively. Research stressing the former approach was pioneered by Krugman (1979) and Flood and Garber (1984). According to this line of research, the failure of governments to adopt domestic monetary and fiscal policies consistent with their stated exchange rate targets leads to a gradual diminution of reserves and eventually a stock adjustment that depletes reserves suddenly in one attack (Sachs, Tornell, and Velasco, 1996, page 47). The result is either a devaluation of the exchange rate or a switch to floating. Subsequent work of this genre has specified a number of other channels, in addition to that involving inconsistent and unsustainable monetary and fiscal policies, that can precipitate an attack: 1. Inconsistency between external and internal objectives. The stances of monetary and fiscal policies may be consistent with the authorities' exchange rate target, but domestic economic indicators (such as the unemployment rate) may be inconsistent with internal balance, resulting in pressures on the authorities to relax macroeconomic policies. Private agents, aware of this inconsistency, perceive an opportunity for profits from a currency devaluation and precipitate an attack. 2. Contagion effects. Prior to an attack on another currency (say that of country B), the market may view a country's (say, country A's) exchange rate as consistent with economic fundamentals and, thus, sustainable.
Collapsing Exchange Rate Regimes
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Author : Robert P. Flood
language : en
Publisher:
Release Date : 1995
Collapsing Exchange Rate Regimes written by Robert P. Flood and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1995 with Balance of payments categories.
In the literature on speculative attacks on a fixed exchange rate, it is usually assumed that the monetary authority responsible for fixing the exchange rate reacts passively to the monetary disruption caused by the attack. This assumption is grossly at odds with actual experience where monetary-base implications of the attacks are usually sterilized. Such sterilization renders the standard monetary-approach attack model unable to provide intellectual guidance to recent attack episodes. In this paper we describe the problems with the standard model and develop a version of the portfolio-balance exchange rate model that allows the study of episodes with sterilization. Sterilized attacks may be regarded as a laboratory test of the monetary versus portfolio-balance exchange rate models. The monetary model fails the test. These issues are motivated by reference to the December 1994 collapse of the Mexican peso.
The Collapse Of Exchange Rate Regimes
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Author : George S Tavlas
language : en
Publisher:
Release Date : 1996-12-31
The Collapse Of Exchange Rate Regimes written by George S Tavlas and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1996-12-31 with categories.
Collapsing Exchange Rate Regimes
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Author : Linda S. Goldberg
language : en
Publisher:
Release Date : 1988
Collapsing Exchange Rate Regimes written by Linda S. Goldberg and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1988 with Foreign exchange categories.
Patterns in domestic credit creation stemming from inconsistent fiscal policies have received widespread attention for aggravating speculative attacks on central bank foreign exchange reserves and contributing to the collapse of exchange rate regimes. This paper acknowledges the importance of monetary and fiscal discipline, but also emphasizes the importance of other random shocks to the domestic money market, most notably shocks from external credit supplies and relative prices. Policies of the domestic fiscal authorities are only partial catalysts for speculative attacks on a currency. Expansion of domestic credit stemming from the monetization of fiscal imbalances may be dominated by involuntary domestic credit expansions necessitated by surprise shortages in supplies of external capital. Further, the unexpected availability of external capital translates into a lower net critical reserve floor, making the depletion of central bank reserves by a speculative attack more difficult to accomplish. Also of considerable importance are relative price shocks which directly influence the probability of collapse by randomizing the demand for nominal money balances. Empirical studies of exchange rate crises that neglect these considerations will produce biased estimates of both expected collapse probabilities and anticipated post-collapse exchange rates.
The Operation And Collapse Of Fixed Exchange Rate Regimes
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Author : Peter M. Garber
language : en
Publisher:
Release Date : 1994
The Operation And Collapse Of Fixed Exchange Rate Regimes written by Peter M. Garber and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1994 with Foreign exchange rates categories.
The paper reviews the recent literature on exchange rate target zones and on speculative attacks on fixed exchange rates. The influential Krugman model of exchange rate target zones has two main results, namely that credible target zones stabilize exchange rates more than fundamentals (the `honeymoon effect') and that exchange rates depend on fundamentals according to a nonlinear `S-curve' with `smooth pasting.' Almost all the model's empirical implications have been overwhelmingly rejected. Later research has reconciled the theory with empirical results by allowing for imperfectly credible exchange rates and for intra-marginal central bank interventions. That research has also shown that non-linearities and smooth pasting are probably empirically insignificant and that a linear managed-float model is a good approximation to exchange rate target zones. The speculative attack literature has developed models built on the principles of no anticipated price discontinuities, endogenous timing of the speculative attack, and the attack occurring when a finite amount of foreign exchange reserves remain. These models have been extended to include random timing of attacks and alternative post attack regimes. Some empirical tests have been undertaken. In contrast to target zone models, speculative attack models have been influenced by empirical results only to a small extent.
Growth Effects Of The Exchange Rate Regime And The Capital Account Openness In A Crisis Prone World Market
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Author : Assaf Razin
language : en
Publisher:
Release Date : 2004
Growth Effects Of The Exchange Rate Regime And The Capital Account Openness In A Crisis Prone World Market written by Assaf Razin and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2004 with Balance of payments categories.
"It has been a remarkably difficult empirical task to identify clear-cut real effects of exchange-rate regimes on the open economy. Similarly, no definitive view emerges as to the aggregate effects of capital account liberalizations. The main hypothesis of the paper is that a direct and an indirect effect of balance-of-payments policies, geared toward exchange rate regimes and capital account openness, exert a confounding overall influence on output growth, in the presence of sudden-stop crises. A direct channel works through the trade and financial sectors, akin to the optimal currency area arguments. An indirect channel works through the probability of a sudden-stop crisis. The empirical analysis disentagles these conflicting effects and demonstrates that: (i) the balance-of-payments policies significantly affect the probability of crises, and the crisis probability, in turn, negatively affects output growth; (ii) controlling for the crisis probability in the growth equation, the direct effect of balance-of-payments policies is large. Domestic price crises (high inflation above a 20 percent threshold) affect growth only indirectly; through their positive effecton the probability of sudden-stop crises"--NBER website
Collapsing Exchange Rate Regimes
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Author : Linda S. Goldberg
language : en
Publisher:
Release Date : 1988
Collapsing Exchange Rate Regimes written by Linda S. Goldberg and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1988 with Foreign exchange categories.
Chronicle Of Currency Collapses
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Author : Matthieu Bussière
language : en
Publisher:
Release Date : 2010
Chronicle Of Currency Collapses written by Matthieu Bussière and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2010 with Currency crises categories.
The impact of currency collapses (i.e. large nominal depreciations or devaluations) on real output remains unsettled in the empirical macroeconomic literature. This paper provides new empirical evidence on this relationship using a dataset for 108 emerging and developing economies for the period 1960-2006. We provide estimates of how these episodes affect growth and output trend. Our main finding is that currency collapses are associated with a permanent output loss relative to trend, which is estimated to range between 2% and 6% of GDP. However, we show that such losses tend to materialise before the drop in the value of the currency, which suggests that the costs of a currency crash largely stem from the factors leading to it. Taken on its own (i.e. ceteris paribus) we find that currency collapses tend to have a positive effect on output. More generally, we also find that the likelihood of a positive growth rate in the year of the collapse is over two times more likely than a contraction, and that positive growth rates in the years that follow such episodes are the norm. Finally, we show that the persistence of the crash matters, i.e. one-time events induce exchange rate and output dynamics that differ from consecutive episodes.