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U S Dollar Dynamics

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U S Dollar Dynamics

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Author : Mr.Ravi Balakrishnan
language : en
Publisher: International Monetary Fund
Release Date : 2016-07-05

U S Dollar Dynamics written by Mr.Ravi Balakrishnan 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 2016-07-05 with Business & Economics categories.

We investigate the drivers of dynamics of major U.S. FX bilaterals. We first construct a novel measure of FX risk premiums using Consensus exchange rate forecasts. We then use VAR analysis to show that (i) risk premium shocks play a key role in driving dynamics of the major U.S. FX bilaterals; (ii) longer-term interest differentials also matter, especially for the Canadian $ and the Euro; (iii) oil price shocks play a particularly important role for the Canadian $ (an oil exporter); and (iv) risk appetite shocks (e.g., VIX shocks) generally lead to U.S. dollar appreciation. The importance of risk premium and longer-term interest differential shocks fit well with a simple theoretical model and are supported by recent event studies.

U S Dollar Dynamics

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Author : Ravi Balakrishnan
language : en
Publisher:
Release Date : 2016

U S Dollar Dynamics written by Ravi Balakrishnan 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.

Euro Dollar Real Exchange Rate Dynamics In An Estimated Two Country Model

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Author : Pau Rabanal
language : en
Publisher: International Monetary Fund
Release Date : 2006-07

Euro Dollar Real Exchange Rate Dynamics In An Estimated Two Country Model written by Pau Rabanal 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 2006-07 with Business & Economics categories.

We use a Bayesian approach to estimate a standard two-country New Open Economy Macroeconomics model using data for the United States and the euro area, and we perform model comparisons to study the importance of departing from the law of one price and complete markets assumptions. Our results can be summarized as follows. First, we find that the baseline model does a good job in explaining real exchange rate volatility but at the cost of overestimating volatility in output and consumption. Second, the introduction of incomplete markets allows the model to better match the volatilities of all real variables. Third, introducing sticky prices in Local Currency Pricing improves the fit of the baseline model but does not improve the fit as much as introducing incomplete markets. Finally, we show that monetary shocks have played a minor role in explaining the behavior of the real exchange rate, while both demand and technology shocks have been important.

The Exchange Rate In A Dynamic Optimizing Current Account Model With Nominal Rigidities

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Author : Robert Miguel W. K. Kollman
language : en
Publisher: International Monetary Fund
Release Date : 1997-01-01

The Exchange Rate In A Dynamic Optimizing Current Account Model With Nominal Rigidities written by Robert Miguel W. K. Kollman 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 1997-01-01 with Business & Economics categories.

This paper studies dynamic-optimizing model of a semi-small open economy with sticky nominal prices and wages. The model exhibits exchange rate overshooting in response to money supply shocks. The predicted variability of nominal and real exchange rates is roughly consistent with that of G-7 effective exchange rates during the post-Bretton Woods era. The model predicts that a positive domestic money supply shock lowers the domestic nominal interest rate, that it raises output and that it leads to a nominal and real depreciation of the country’s currency. Increases in domestic labor productivity and in the world interest rate too are predicted to induce a nominal and real exchange rate depreciation.

The Us Dollar And The Brics Challenge

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Author : Hermann Selchow
language : en
Publisher: Hermann Selchow
Release Date : 2023-08-13

The Us Dollar And The Brics Challenge written by Hermann Selchow and has been published by Hermann Selchow this book supported file pdf, txt, epub, kindle and other format this book has been release on 2023-08-13 with Business & Economics categories.

The upcoming BRICS summit is just around the corner. The five BRICS nations are reportedly planning their own gold-based reserve currency. This rumor gains traction due to several events. Firstly, the world is currently undergoing structural changes. NATO's expansion towards the east and north in Europe continues. An immediate consequence of NATO's eastward expansion is the military conflicts in Ukraine. Russia has been excluded from the SWIFT system. This exclusion means that Russian banks can no longer directly communicate with other international banks for cross-border transactions. Without access to the SWIFT network, Russia is cut off from most international payment and settlement systems. This could complicate trade with other countries and impact economic relationships. Such isolation could destabilize Russian financial markets and erode investor confidence. The exclusion from the SWIFT system is a serious measure and is to be understood as a political leverage. Thus, it's not surprising that the rumor about a potentially Yuan-backed new reserve currency is gaining momentum. Additionally, the evidently unsuccessful visit of American Secretary of State Blinken to China resulted in a sharp drop in the US dollar's value. China holds massive dollar reserves due to its trade surplus. The BRICS nations can leverage this gold to significantly reduce their reliance on the US dollar. China, furthermore, holds immense dollar reserves. If China were to sell off its substantial dollar reserves, it would have significant repercussions on the global economy and financial markets. Selling large amounts of US dollars would lead to an oversupply, reducing the dollar's value against other currencies. A depreciation of the US dollar would have far-reaching effects on the international trading community, especially countries heavily reliant on trade with the US. On the flip side, China is also dependent on the US, as a significant portion of its goods is exported there. A sudden devaluation of the US dollar could impede the competitiveness of Chinese exports, making them more expensive for US customers. This could negatively affect Chinese economic growth. The sale of dollar reserves could thus lead to losses for China if the dollar depreciates during the sale. However, the global economy is a complex network influenced by various actors and circumstances. In recent decades, the dominance of the US dollar as the world's reserve currency has played a significant role. The dollar has shaped the international trade landscape for many decades and profoundly influenced geopolitical relations. Yet, in recent years, new powers have risen, challenging the status quo. The BRICS nations - Brazil, Russia, India, China, and South Africa - have gained increasing economic importance and are pushing for a reform of the international financial system. My book, "The US Dollar and the BRICS Challenge," aims to bring readers closer to the history of dollar dominance and the emerging BRICS nations as potential counterbalances. It should be seen as an attempt to shed light on current events in the world and help better understand ongoing upheavals and restructuring. The book delves into the backgrounds that have led to the power struggles of our time and offers insights into a possible future, analyzing the implications for the global economy. The various aspects of the topic are explored, starting from the historical events that led to the emergence of dollar dominance, all the way to the current efforts of the BRICS nations to break free from this dominance and strengthen their own positions. We will examine the roots of dollar dominance, covering key milestones from the 1944 Bretton Woods Conference to the abandonment of the gold standard in 1971. The crucial role of the United States as a superpower and its economic and political interests in maintaining dollar dominance will also be scrutinized. Another part of the book focuses on the BRICS nations and their rise as economic heavyweights. Each country is examined individually to analyze its specific economic, political, and social developments. While all five countries face different challenges and opportunities, they all strive to have their voices heard in the global economic order. Their efforts to build alternative currency and financial structures are also thoroughly examined. Furthermore, the conflicts and tensions between the US dollar and the BRICS nations are closely examined. I aim to illustrate how the United States defends its dominance in the world economy by all means and takes measures to preserve the dollar's status. Simultaneously, the BRICS nations are forming their own economic alliance and seeking ways to break free from dollar dependency. This power struggle has implications for global stability and may potentially lead to a reconfiguration of the international financial architecture. Additionally, a glimpse into the future is provided. What might the world economy look like in the next few decades? What role will the BRICS nations and the dollar play? What scenarios are conceivable, and how might they affect various actors? These questions are discussed based on current developments and trends, exploring both optimistic and pessimistic scenarios. It is important to emphasize that this book cannot provide definitive answers. The dynamics between the US dollar and the BRICS nations are complex and multifaceted, and developments are still ongoing. Instead, this book aims to encourage contemplation about the current world order and the potential changes that directly affect each and every one of us. This book offers a wealth of information, analysis, and perspectives that allow readers to form their own opinions and stimulate further discussions. This book is an invitation to engage with this topic and take a look behind the scenes of the global economy. It invites you to explore the history, present, and future of dollar dominance and the BRICS nations. It is an invitation to immerse yourself in this world with me, a world full of challenges, opportunities, and uncertain perspectives. The decisions made by these two contenders could directly impact each and every one of us - therefore, we should strive to understand them, discuss them, and potentially influence them. Hermann Selchow

Exchange Rate Dynamics Expectations And Monetary Policy

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Author : Qianying Chen
language : de
Publisher:
Release Date : 2011

Exchange Rate Dynamics Expectations And Monetary Policy written by Qianying Chen and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2011 with categories.

Global Trade And The Dollar

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Author : Ms.Emine Boz
language : en
Publisher: International Monetary Fund
Release Date : 2017-11-13

Global Trade And The Dollar written by Ms.Emine Boz 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 2017-11-13 with Business & Economics categories.

We document that the U.S. dollar exchange rate drives global trade prices and volumes. Using a newly constructed data set of bilateral price and volume indices for more than 2,500 country pairs, we establish the following facts: 1) The dollar exchange rate quantitatively dominates the bilateral exchange rate in price pass-through and trade elasticity regressions. U.S. monetary policy induced dollar fluctuations have high pass-through into bilateral import prices. 2) Bilateral non-commodities terms of trade are essentially uncorrelated with bilateral exchange rates. 3) The strength of the U.S. dollar is a key predictor of rest-of-world aggregate trade volume and consumer/producer price inflation. A 1 percent U.S. dollar appreciation against all other currencies in the world predicts a 0.6–0.8 percent decline within a year in the volume of total trade between countries in the rest of the world, controlling for the global business cycle. 4) Using a novel Bayesian semiparametric hierarchical panel data model, we estimate that the importing country’s share of imports invoiced in dollars explains 15 percent of the variance of dollar pass-through/elasticity across country pairs. Our findings strongly support the dominant currency paradigm as opposed to the traditional Mundell-Fleming pricing paradigms.

Dollar Invoicing Global Value Chains And The Business Cycle Dynamics Of International Trade

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Author : Mr. David Cook
language : en
Publisher: International Monetary Fund
Release Date : 2022-02-11

Dollar Invoicing Global Value Chains And The Business Cycle Dynamics Of International Trade written by Mr. David Cook 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 2022-02-11 with Business & Economics categories.

Recent literature has highlighted that international trade is mostly priced in a few key vehicle currencies and is increasingly dominated by intermediate goods and global value chains (GVCs). Taking these features into account, this paper reexamines the relationship between monetary policy, exchange rates and international trade flows. Using a dynamic stochastic general equilibrium (DSGE) framework, it finds key differences between the response of final goods and GVC trade to both domestic and foreign shocks depending on the origin and ultimate destination of value added and the intermediate shipments involved. For example, the model shows that in response to a dollar appreciation triggered by a US interest rate increase, direct bilateral trade between non-US countries contracts more than global value chain oriented trade which feeds US final demand, and exports to the US decline much more when measured in gross as opposed to value added terms. We use granular data on GVCs at the sector level to document empirical evidence in favor of these key predictions of the model.

The Exorbitant Burden

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Author : Taranza T. Ganziro
language : en
Publisher: Emerald Group Publishing
Release Date : 2016-01-06

The Exorbitant Burden written by Taranza T. Ganziro and has been published by Emerald Group Publishing this book supported file pdf, txt, epub, kindle and other format this book has been release on 2016-01-06 with Business & Economics categories.

This economic and political science work is a rigorous analysis that demonstrates that although it is a privilege and a benefit for the US to have its currency, the dollar, as the leading world reserve currency, the privilege also proves to be a very significant economic and security burden imposed on the nation.

The Dynamic Relationship Between The Dollar And U S Prices

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Author : Paul D. Koch
language : en
Publisher:
Release Date : 1986

The Dynamic Relationship Between The Dollar And U S Prices written by Paul D. Koch and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1986 with Consumer price indexes categories.

U S Dollar Dynamics

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