The Asymmetric Effects Of Exchange Rate Fluctuations
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The Asymmetric Effects Of Exchange Rate Fluctuations
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Author : Ms.Magda E. Kandil
language : en
Publisher: INTERNATIONAL MONETARY FUND
Release Date : 2000-11-01
The Asymmetric Effects Of Exchange Rate Fluctuations written by Ms.Magda E. Kandil 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 2000-11-01 with Business & Economics categories.
The paper examines the asymmetric effects of exchange rate fluctuations on real output and price in developing countries. The theoretical model decomposes movements in the exchange rate into anticipated and unanticipated components. Unanticipated currency fluctuations determine aggregate demand through exports, imports, and the demand for domestic currency, and determine aggregate supply through the cost of imported intermediate goods. The evidence indicates that the supply channel leads to output contraction and price inflation in the face of unanticipated currency depreciation. In contrast, the reduction in net exports determines output contraction without reducing price inflation in the face of unanticipated currency appreciation.
The Asymmetric Effects Of Exchange Rate Fluctuations
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Author : Magda Kandil
language : en
Publisher: International Monetary Fund
Release Date : 2000
The Asymmetric Effects Of Exchange Rate Fluctuations written by Magda Kandil 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 2000 with Foreign exchange rates categories.
Asymmetric Effects Of Exchange Rate Changes And The J Curve
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Author : Mohsen Bahmani-Oskooee
language : en
Publisher:
Release Date : 2017
Asymmetric Effects Of Exchange Rate Changes And The J Curve written by Mohsen Bahmani-Oskooee and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017 with categories.
Research on the impact of currency depreciation on the trade balance is now moving in a new direction by incorporating nonlinear dynamic adjustment of the exchange rate and by using a nonlinear approach to error-correction modeling and cointegration. Using these advances, researchers find not only more evidence of the J-curve effect, but also new evidence of asymmetric effects of exchange rate changes on the trade balance. We contribute to this line of research by using monthly trade flow data from 61 two-digit industries that trade between Malaysia and Thailand, and show that not only does currency depreciation have favorable effects on the trade balance of more industries, but the long-run effects are asymmetric in 26 out of 61 cases. In line with current literature, our nonlinear model performs much better than the linear model when industry level data are used.
Asymmetry Effects Of Exchange Rate Changes On Domestic Production
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Author : Mohsen Bahmani-Oskooee
language : en
Publisher:
Release Date : 2016
Asymmetry Effects Of Exchange Rate Changes On Domestic Production written by Mohsen Bahmani-Oskooee and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2016 with categories.
Currency depreciation is said to have positive or negative effects on domestic production. Previous studies that tried to address this issue using Australian data have been inconclusive at best but mostly showed no effects. One common feature of all studies is that they have assumed that the effects of exchange rate changes are symmetric. In this paper, we use the concept of partial sum and separate appreciations from depreciations to test whether the effects are symmetric or asymmetric. Application of the nonlinear ARDL approach of Shin et al. (2014) reveals that indeed the effects of changes in the real effective exchange rate of the Australian dollar are asymmetric in the short run as well as in the long run. While in the short run both appreciations and depreciations affect Australian domestic production, only effects of appreciation last into the long run, a unique finding.
Asymmetric Effects Of Exchange Rate Changes On British Bilateral Trade Balances
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Author : Mohsen Bahmani-Oskooee
language : en
Publisher:
Release Date : 2016
Asymmetric Effects Of Exchange Rate Changes On British Bilateral Trade Balances written by Mohsen Bahmani-Oskooee and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2016 with categories.
This research presents first empirical time series evidence of the asymmetric impact of exchange rate changes on Britain's trade balances with her 8 trading partners. Recent advances in time series and cointegration analysis have allowed for the estimation of the nonlinear effects of currency depreciations on countries' trade balances. To this extent, we employ the nonlinear version of the Autoregressive Distributed Lag (ARDL) approach to cointegration and error correction methodologies to examine whether pound appreciations affect trade differently than do pound depreciations. We use monthly trade data which runs from 1998M1 to 2015M11 to capture more robustly the asymmetric impacts of exchange rate changes on trade balances. Econometric results from the non-ARDL procedures reveal that there exist long-run relationships in the case of UK-Canada, UK-Germany, UK-Italy, UK-Japan, UK-Korea, and UK-US trade balance models. Nevertheless, we did not find any long-run relationship in the case of UK-Spain and UK-Norway trade balance models. We also present empirical evidence for the existence of long-run asymmetries of exchange rates in the case of UK-Germany, UK-Italy, UK-Korea, and UK-Japan trade balance models. This paper also discusses policy implications of the empirical results as well as offering policy recommendations.
Unveiling The Effects Of Foreign Exchange Intervention
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Author : Gustavo Adler
language : en
Publisher: International Monetary Fund
Release Date : 2015-06-23
Unveiling The Effects Of Foreign Exchange Intervention 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 2015-06-23 with Business & Economics categories.
We study the effect of foreign exchange intervention on the exchange rate relying on an instrumental-variables panel approach. We find robust evidence that intervention affects the level of the exchange rate in an economically meaningful way. A purchase of foreign currency of 1 percentage point of GDP causes a depreciation of the nominal and real exchange rates in the ranges of [1.7-2.0] percent and [1.4-1.7] percent respectively. The effects are found to be quite persistent. The paper also explores possible asymmetric effects, and whether effectiveness depends on the depth of domestic financial markets.
Exchange Rate Pass Through Over The Business Cycle In Singapore
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Author : Mr.Sam Ouliaris
language : en
Publisher: International Monetary Fund
Release Date : 2011-06-01
Exchange Rate Pass Through Over The Business Cycle In Singapore written by Mr.Sam Ouliaris 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 2011-06-01 with Business & Economics categories.
This paper investigates exchange rate pass-through in Singapore using band-pass spectral regression techniques, allowing for asymmetric effects over the business cycle. First stage pass-through is estimated to be complete and relatively quick, confirming existing views that the exchange rate provides an effective tool to moderate imported inflation in Singapore. Asymmetric pass-through effects over the business cycle are also detected, with importers passing on a smaller share of exchange rate movements during boom periods as compared to recessions. This result suggest that Singapore’s exchange rate policy could afford to "lean against the wind," especially during cyclical expansions.
The Effects Of Exchange Rate Fluctuations On Economic Activity In Turkey
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Author : Magda Kandil
language : en
Publisher:
Release Date : 2018
The Effects Of Exchange Rate Fluctuations On Economic Activity In Turkey written by Magda Kandil and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2018 with categories.
The paper examines the effects of exchange rate fluctuations on real output, the price level, and the real value of components of aggregate demand in Turkey. The theoretical model decomposes movements in the exchange rate into anticipated and unanticipated components. Unanticipated currency fluctuations help to determine aggregate demand through exports, imports, and the demand for domestic currency, and aggregate supply through the cost of imported intermediate goods and producers' forecasts of relative competitiveness. Anticipated exchange rate appreciation has significant adverse effects, contracting the growth of real output and the demand for investment and exports, while raising price inflation. Unanticipated exchange rate fluctuations have asymmetric effects that highlight the importance of unanticipated depreciation in shrinking output growth and the growth of private consumption and investment, despite an increase in export growth.
The International Role Of The Dollar And Trade Balance Adjustment
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Author : Linda S. Goldberg
language : en
Publisher:
Release Date : 2006
The International Role Of The Dollar And Trade Balance Adjustment 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 2006 with Business & Economics categories.
The pattern of international trade adjustment is affected by the continuing international role of the dollar and related evidence on exchange rate pass-through into prices. This paper argues that a depreciation of the dollar would have asymmetric effects on flows between the United States and its trading partners. With low exchange rate pass-through to U.S. import prices and high exchange rate pass-through to the local prices of countries consuming U.S. exports, the effect of dollar depreciation on real trade flows is dominated by an adjustment in U.S. export quantities, which increase as U.S. goods become cheaper in the rest of the world. Real U.S. imports are affected less because U.S. prices are more insulated from exchange rate movements -- pass-through is low and dollar invoicing is high. In relation to prices, the effects on the U.S. terms of trade are limited: U.S. exporters earn the same amount of dollars for each unit shipped abroad, and U.S. consumers do not encounter more expensive imports. Movements in dollar exchange rates also affect the international trade transactions of countries invoicing some of their trade in dollars, even when these countries are not transacting directly with the United States.
Currency Mismatches And Vulnerability To Exchange Rate Shocks Nonfinancial Firms In Colombia
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Author : Mr.Adolfo Barajas
language : en
Publisher: International Monetary Fund
Release Date : 2017-11-22
Currency Mismatches And Vulnerability To Exchange Rate Shocks Nonfinancial Firms In Colombia written by Mr.Adolfo Barajas 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 2017-11-22 with Business & Economics categories.
After building up foreign currency denominated (FC) liabilities over several years, Colombian firms might be vulnerable to a shift in external conditions. We undertake three empirical exercises to better understand these vulnerabilities. First, we identify the determinants of FC borrowing. Second, we investigate the implications for real activity, finding a balance sheet effect that transmits exchange rate fluctuations to investment and is asymmetric, much stronger for depreciations than for appreciations. Finally, we find that foreign exchange derivatives are not used solely for hedging, due in part to monetary authority intervention to smooth exchange rate volatility. However, a full explanation remains open for future research.