Limited Participation and International Risk Sharing: Does the Nominal Exchange Rate Matter?

2014 ◽  
Author(s):  
Xuedong Wang
Keyword(s):  
Exchange Rate ◽  
Risk Sharing ◽  
Nominal Exchange Rate ◽  
Limited Participation ◽  
International Risk Sharing

International Risk Sharing: Through Equity Diversification or Exchange Rate Hedging?

2009 ◽  
Vol 09 (138) ◽  
pp. 1 ◽  
Author(s):  
Akito Matsumoto ◽  
Charles Engel ◽  
◽  
Keyword(s):  
Exchange Rate ◽  
Risk Sharing ◽  
International Risk Sharing

scholarly journals Migrant Remittances and Exchange Rate Regimes in the Developing World

2010 ◽  
Vol 104 (2) ◽  
pp. 307-323 ◽  
Author(s):  
DAVID ANDREW SINGER
Keyword(s):  
Developing Countries ◽  
Exchange Rate ◽  
Risk Sharing ◽  
Developing World ◽  
Exchange Rate Regimes ◽  
Strong Support ◽  
Bank Lending ◽  
International Risk Sharing ◽  
Data Set ◽  
Migrant Remittances

This article argues that the international financial consequences of immigration exert a substantial influence on the choice of exchange rate regimes in the developing world. Over the past two decades, migrant remittances have emerged as a significant source of external finance for developing countries, often exceeding conventional sources of capital such as foreign direct investment and bank lending. Remittances are unlike nearly all other capital flows in that they are stable and move countercyclically relative to the recipient country's economy. As a result, they mitigate the costs of forgone domestic monetary policy autonomy and also serve as an international risk-sharing mechanism for developing countries. The observable implication of these arguments is that remittances increase the likelihood that policy makers adopt fixed exchange rates. An analysis of data onde factoexchange rate regimes and a newly available data set on remittances for up to 74 developing countries from 1982 to 2006 provides strong support for these arguments. The results are robust to instrumental variable analysis and the inclusion of multiple economic and political variables.

The Relation between National Stock Prices and Effective Exchange Rates: Does It Affect Exchange Rate Exposure?

2015 ◽  
Vol 15 (2) ◽  
pp. 241-256 ◽  
Author(s):  
Marko Korhonen
Keyword(s):  
Exchange Rate ◽  
Stock Market ◽  
Exchange Rates ◽  
Stock Prices ◽  
Risk Sharing ◽  
International Risk Sharing ◽  
Exchange Rate Exposure ◽  
Effective Exchange ◽  
The Exchange Rate ◽  
Cointegration Relationship

There is twofold contribution in this paper. First, by using monthly data for 16 industrialized countries for the period 1973–2011 we find evidence of time-varying cointegration relationship between effective exchange rates and national stock market indices. Second, we present that the cointegration relationship affects exchange rate exposure. We propose that the exchange rate exposure effect changes when the connection between the exchange rate and stock market emerges. This is a new result and reflects importance of these markets’ joint role in international risk sharing.

Borders and Nominal Exchange Rates in Risk-Sharing

2019 ◽  
Vol 18 (3) ◽  
pp. 1238-1283
Author(s):  
Michael B Devereux ◽  
Viktoria V Hnatkovska
Keyword(s):  
Exchange Rate ◽  
Exchange Rates ◽  
Open Economy ◽  
Risk Sharing ◽  
Real Exchange Rates ◽  
Nominal Exchange Rate ◽  
Border Effect ◽  
Data Set ◽  
Consumption Growth ◽  
Relative Consumption

Abstract Models of risk-sharing predict that relative consumption growth rates are positively related to changes in real exchange rates. We investigate this hypothesis using a new multicountry and multiregional data set. Within countries, we find evidence for risk-sharing: episodes of high relative regional consumption growth are associated with regional real exchange rate depreciation. Across countries, however, the association is reversed: relative consumption and real exchange rates are negatively correlated. We define this reversal as a “border” effect. We find the border effect and show that it accounts for over half of the deviations from full risk-sharing. Since cross–border real exchange rates involve different currencies, it is natural to ask how much of the border effect is accounted for by movements in exchange rates. Our measures indicate that a large part of the border effect comes from nominal exchange rate fluctuations. We develop a simple open economy model that is consistent with the importance of nominal exchange rate variability in accounting for deviations from cross–country risk-sharing.

Sign in / Sign up

Export Citation Format

Share Document