scholarly journals Keynesian and Austrian Perspectives on Crisis, Shock Adjustment, Exchange Rate Regime and (Long-Term) Growth

2011 ◽  
Author(s):  
Gunther Schnabl ◽  
Mathilde Maurel
Keyword(s):  
Exchange Rate ◽  
Exchange Rate Regime

HOW THE EXCHANGE RATE REGIME AFFECTS ADJUSTMENT TO LARGE OIL PRICE SWINGS IN OIL EXPORTING COUNTRIES

2021 ◽  
Author(s):  
MAJED S. ALMOZAINI
Keyword(s):  
Exchange Rate ◽  
Money Supply ◽  
Government Spending ◽  
Exchange Rate Regime ◽  
Exchange Rate Regimes ◽  
Oil Price ◽  
Fixed Exchange Rate ◽  
Floating Exchange Rate ◽  
The Exchange Rate

The aim of this study is to analyze how oil price shocks affect the economic growth of floating exchange rate regimes and fixed exchange rate regimes in oil-exporting countries with a ratio of oil exports to total exports exceeding 70%. Also, this study seeks to determine what monetary and fiscal policies both regimes apply in order to curb business cycles and reduce inflationary and recessionary gaps. The analytical study uses panel data for the period from 1991 to 2019, covering 24 oil-exporting countries, from the World Economic Outlook (WEO) database and World Bank. The econometric model is estimated by applying a panel VECM to examine the short- and long-term interdependencies in the macroeconomic variables. The results demonstrate that when there is a negative shock to the oil price, the exchange rate of the floating exchange rate regimes depreciates, money supply increases, and government spending decreases. In contrast, the exchange rate of the fixed exchange rate regimes fluctuates slightly; the money supply slightly decreases in the near, medium, and long term; and government spending decreases.

scholarly journals USE OF (HARD AND SOFT) PEGGED EXCHANGE RATE REGIMES ON THE PATH TO EUROPEAN INTEGRATIONS IN TERMS OF CRISIS

2018 ◽  
pp. 250-266
Keyword(s):  
Exchange Rate ◽  
Exchange Rate Regime ◽  
Exchange Rate Regimes ◽  
Exchange Rate Policy ◽  
External Shocks ◽  
Exchange Rate Fluctuations ◽  
Accession Countries ◽  
Rate Policy ◽  
Pros And Cons

Important aspect of ongoing discussions on the choice of exchange rate regime is its reaction to crisis as a strong and unexpected external shock; such was the case of Great Recession from 2008.-onwards. It is generally accepted that pegged exchange rate regimes are more sensitive to external shocks that might cause their long-term destabilization. Still, the soft pegged regimes (also entitled intermediate regimes) have fewer limits, with rules that allow more maneuver space for national strategy. The group of soft pegged regimes is wider, both in structure and scope, then those of hard pegged regimes. While countries with more flexible regimes might use exchange rate fluctuations as automatic stabilisator, (hard and/or soft) pegs impose some limitations. In the first place, there is stability goal that, in combination with strict regulatory rules, limits the monetary and exchange rate policy, demanding the use of other strategies, such is the internal devaluation. Secondly, these countries do not use wide scope of instruments and their crisis strategy is more rigid than those of other regimes. Finally, there are dilemmas on the optimality of exchange rate strategy during the pre-eurozone membership period, including the euro introduction strategy. These dilemmas deepen in terms of crisis. This paper focuses on comparison of hard and soft pegged regimes (the latter also entitled intermediate regimes) in selected European union accession countries, using „de facto“classification scale developed by International Monetary Fund. Despite the crisis, there have not been dramatic turbulences in terms of exchange rate policy in observed countries, but the general economic indicators clearly show the real depth of crisis and slow recovery. The question open for further discussion is whether such regimes should be obtained or abandoned during the crisis and what is their contribution to national economy. Furthermore, there are pros and cons of possible strategies, considering the European integration process.

scholarly journals Fiscal Policy in a Floating Exchange Rate Regime with Consumption Home Bias

2016 ◽  
Vol 8 (6) ◽  
pp. 24
Author(s):  
Chung-Fu Lai ◽  
Wen-Fang Wang
Keyword(s):  
Exchange Rate ◽  
Open Economy ◽  
Simulation Analysis ◽  
Exchange Rate Regime ◽  
Home Bias ◽  
Terms Of Trade ◽  
Long Term Effects ◽  
Theoretical Derivation ◽  
Fiscal Spending

This paper presents New Open Economy Macroeconomics as the analytical framework in attempt to explore the long term effects of fiscal expenditure shocks on various macroeconomic variables (e.g. consumption, output, prices, exchange rate, terms of trade), and tries to explain the role that consumption home bias plays. With theoretical derivation and simulation analysis, we find that in the long-term, an increasing in fiscal spending will cause rise of domestic output, domestic price index and the exchange rate, but it will crowd out domestic private consumption, the relationship between fiscal spending and the terms of trade, which is depending on asymmetry of consumption bias behavior of consumers between countries.

The Politics of Exchange Rate—Based Stabilization Versus Structural Reforms in Latin America

2009 ◽  
Vol 42 (9) ◽  
pp. 1193-1216 ◽  
Author(s):  
Cameron G. Thies ◽  
Moises Arce
Keyword(s):  
Latin America ◽  
Exchange Rate ◽  
Exchange Rate Regime ◽  
Sustainable Growth ◽  
Structural Reforms ◽  
Policy Makers ◽  
Policy Choices ◽  
Alternative Hypotheses ◽  
Comprehensive Test

In the 1990s, the choice of an appropriate exchange rate regime began to capture the attention of policy makers across Latin America. Several countries pegged their currency to the U.S. dollar or even officially substituted the dollar for their national currency. Although economists and political scientists have made piecemeal contributions to the understanding of such policy choices, the literature currently lacks an integrated theoretical framework and a comprehensive test of alternative hypotheses. This study seeks to rectify these gaps in the literature by arguing that policy makers see the implementation of fixed exchange rate regimes as a politically expedient commitment device that allows them to avoid adopting more difficult long-term adjustment policies designed to attain macroeconomic stability and sustainable growth. This hypothesis is tested with alternative hypotheses put forward in the burgeoning literature on exchange rate regime choice. Theoretical expectations are supported by the results of several logit models, which confirm some previous findings in the literature.

Exchange Rate Regimes and Economic Stability

2010 ◽  
pp. 29-43
Author(s):  
S. Smirnov
Keyword(s):  
Exchange Rate ◽  
Inflation Targeting ◽  
Exchange Rate Regime ◽  
Exchange Rate Policy ◽  
Real Sector ◽  
Economic Stability ◽  
Exogenous Shocks ◽  
Floating Exchange Rate ◽  
Rate Policy ◽  
Managed Floating

The Bank of Russia intends to introduce inflation targeting policy and exchange rate free floating regime in three years. Exogenous shocks absorption which stabilizes the real sector of economy is usually considered to be one of the advantages of free floating exchange rate policy. However, our research based on the analysis of 25 world largest economies exchange rates and industrial production during the crisis of 2008-2009 does not confirm this hypothesis. The article also analyzes additional risks associated with free floating exchange rate regime in Russia and presents some arguments in favor of managed floating exchange rate regime.

Impact of external currency exposures on macroeconomic policies

2020 ◽  
pp. 23-40
Author(s):  
I. V. Prilepskiy
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Positive Impact ◽  
Exchange Rate Regime ◽  
Macroeconomic Policies ◽  
Panel Regressions ◽  
Financial Account ◽  
Currency Exposure ◽  
Cross Country ◽  
The Impact

Based on cross-country panel regressions, the paper analyzes the impact of external currency exposures on monetary policy, exchange rate regime and capital controls. It is determined that positive net external position (which, e.g., is the case for Russia) is associated with a higher degree of monetary policy autonomy, i.e. the national key interest rate is less responsive to Fed/ECB policy and exchange rate fluctuations. Therefore, the risks of cross-country synchronization of financial cycles are reduced, while central banks are able to place a larger emphasis on their price stability mandates. Significant positive impact of net external currency exposure on exchange rate flexibility and financial account liberalization is only found in the context of static models. This is probably due to the two-way links between incentives for external assets/liabilities accumulation and these macroeconomic policy tools.

The influence of inflation targeting on the pass-through effect of the exchange rate

2018 ◽  
pp. 70-84
Author(s):  
Ph. S. Kartaev ◽  
Yu. I. Yakimova
Keyword(s):  
Developing Countries ◽  
Monetary Policy ◽  
Exchange Rate ◽  
Inflation Targeting ◽  
Policy Regime ◽  
Short And Long Term ◽  
The Exchange Rate ◽  
Pass Through ◽  
The Impact

The paper studies the impact of the transition to the inflation targeting regime on the magnitude of the pass-through effect of the exchange rate to prices. We analyze cross-country panel data on developed and developing countries. It is shown that the transition to this regime of monetary policy contributes to a significant reduction in both the short- and long-term pass-through effects. This decline is stronger in developing countries. We identify the main channels that ensure the influence of the monetary policy regime on the pass-through effect, and examine their performance. In addition, we analyze the data of time series for Russia. It was concluded that even there the transition to inflation targeting led to a decrease in the dependence of the level of inflation on fluctuations in the ruble exchange rate.

Sign in / Sign up

Export Citation Format

Share Document