Fixed Exchange Rate Regimes and Financial Markets as Sources of Macroeconomic Discipline

2013 ◽  
Author(s):  
Thomas D. Willett ◽  
Eric M.P. Chiu ◽  
Stefanie Walter
Keyword(s):  
Exchange Rate ◽  
Financial Markets ◽  
Exchange Rate Regimes ◽  
Fixed Exchange Rate

scholarly journals The Information Content in Bank Currency Mismatches in Fixed Exchange Rate Regimes

2012 ◽  
Vol 2012 ◽  
pp. 1-4
Author(s):  
Victoria Miller
Keyword(s):  
Exchange Rate ◽  
Moral Hazard ◽  
Financial Markets ◽  
Information Content ◽  
Risk Taking ◽  
Exchange Rate Regimes ◽  
The Third ◽  
Hazard Risk ◽  
Fixed Exchange Rate ◽  
Currency Mismatches

Banks tend to leave their currency exposures uncovered in fixed and “intermediate” exchange rate regimes. The paper asks why this is the case. There are three possible explanations: First, hedges are costly and the currency peg is credible; Second, financial markets are incomplete and so hedging instruments are unavailable; or third, hedges are costly and banks expect a bailout should currency gyrations threaten their solvency. The paper demonstrates that the third argument is not time consistent and therefore that uncovered currency exposures reflect currency peg credibility or financial incompleteness and not moral-hazard risk taking.

scholarly journals What Drives Stops in Cross-Border Bond Flows?

2019 ◽  
Vol 11 (14) ◽  
pp. 3763
Author(s):  
Seung-Gwan Baek ◽  
Chi-Young Song
Keyword(s):  
Exchange Rate ◽  
Financial Markets ◽  
Emerging Economies ◽  
Exchange Rate Regimes ◽  
Real Exchange Rates ◽  
Flexible Exchange Rate ◽  
Regression Method ◽  
Policy Implications ◽  
Capital Account ◽  
Cross Border

This paper empirically explores the determinants of stop episodes driven by bond flows using quarterly data from 38 economies over the period 1995–2011. Drastic bond-led stop episodes may greatly destabilize domestic financial markets and lead to financial crisis, threatening the sustainability of the financial system. Using the complementary log–log regression method, we found that bond-led stop episodes were associated with contagion and domestic factors rather than global factors. The results of our estimation showed that the probability of bond-led stop episodes was higher in countries with larger financial markets or with more overvalued real exchange rates. The main policy implications of our results, particularly for emerging economies, are that bond-led stop episodes were less likely to occur in countries with higher levels of institutional quality, lower capital account restrictions, or more flexible exchange-rate regimes. Finally, we found that capital control played a relatively greater role in predicting bond-led stops in emerging economies than did exchange-rate regimes.

China supplants Fed as main risk to EMs

2015 ◽  
Keyword(s):  
Exchange Rate ◽  
Middle East ◽  
Emerging Markets ◽  
Interest Rates ◽  
Futures Markets ◽  
Exchange Rate Regimes ◽  
Content Type ◽  
Fixed Exchange Rate ◽  
Market Turbulence

Significance While futures markets are assigning a 28% probability to a rate hike this month, emerging markets (EMs) are likely to remain under strain regardless of whether the Fed tightens policy or decides to wait longer. While a rate hike in September is likely to strengthen the dollar, putting further pressure on EM currencies, a delay risks being perceived by investors as an indication of the severity of the China-induced market turbulence. Impacts The rise in US interest rates has been well anticipated and will prove less disorderly than the 2013 'taper tantrum'. The strong dollar will put strain on fixed exchange rate regimes, such as dollar pegs in Africa and the Middle East. The benefits to EM exports from the declines in local currencies will be offset by the slump in China's demand.

scholarly journals Interest rate rules for fixed exchange rate regimes

2007 ◽  
Vol 31 (7) ◽  
pp. 2196-2211 ◽  
Author(s):  
Gianluca Benigno ◽  
Pierpaolo Benigno ◽  
Fabio Ghironi
Keyword(s):  
Exchange Rate ◽  
Interest Rate ◽  
Exchange Rate Regimes ◽  
Interest Rate Rules ◽  
Fixed Exchange Rate

On the Value of Words: Inflation and Fixed Exchange Rate Regimes

2014 ◽  
Vol 62 (2) ◽  
pp. 288-322 ◽  
Author(s):  
Atish R Ghosh ◽  
Mahvash S Qureshi ◽  
Charalambos G Tsangarides
Keyword(s):  
Exchange Rate ◽  
Exchange Rate Regimes ◽  
Fixed Exchange Rate

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.

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