scholarly journals Monetary Policy Spillovers, Capital Controls and Exchange Rate Flexibility, and the Financial Channel of Exchange Rates

2019 ◽  
Vol 2019 (363) ◽  
Author(s):  
Georgios Georgiadis ◽  
◽  
Feng Zhu ◽  
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Exchange Rates ◽  
Capital Controls ◽  
Exchange Rate Flexibility ◽  
Monetary Policy Spillovers

scholarly journals Rounding the Corners of the Policy Trilemma: Sources of Monetary Policy Autonomy

2015 ◽  
Vol 7 (4) ◽  
pp. 33-66 ◽  
Author(s):  
Michael W. Klein ◽  
Jay C. Shambaugh
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Developing Economies ◽  
Capital Controls ◽  
International Macroeconomics ◽  
Exchange Rate Flexibility ◽  
Moderate Amount ◽  
Central Result ◽  
Limited Exchange ◽  
Monetary Autonomy

A central result in international macroeconomics is that a government cannot simultaneously opt for open financial markets, fixed exchange rates, and monetary autonomy; rather, it is constrained to choosing no more than two of these three. This paper considers whether partial capital controls and limited exchange rate flexibility allow for full monetary policy autonomy. We find partial capital controls do not generally allow for greater monetary control than with open capital accounts, unless they are quite extensive, but a moderate amount of exchange rate flexibility does allow for some degree of monetary autonomy, especially in emerging and developing economies. (JEL E52, F32, F33)

scholarly journals The Response of G7 Real Exchange Rates to Oil Price Shocks

2018 ◽  
Vol 10 (4) ◽  
pp. 191
Author(s):  
Moayad H. Al Rasasi
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Exchange Rates ◽  
Forecast Error ◽  
Supply And Demand ◽  
Real Exchange Rates ◽  
Aggregate Demand ◽  
Demand Shocks ◽  
Oil Supply ◽  
Exchange Rate Shocks

This paper evaluates the response of G7 real exchange rates to oil supply and demand shocks developed by Kilian (2009). We find evidence suggesting that oil shocks are associated with the appreciation (depreciation) of real exchange rates for oil exporting (importing) countries. Further evidence, based on the analysis of forecast error variance decomposition, indicates that oil-specific demand shocks are the main contributor to variation in real exchange rates, whereas oil supply shocks contribute the least. Finally, regarding the role of monetary policy in responding to oil and exchange rate shocks, we find evidence showing monetary policy reacts only to oil-specific demand and aggregate demand shocks in three countries, whereas monetary policy responds to real exchange rate fluctuations in four countries.

scholarly journals Monetary Policy and the Predictability of Nominal Exchange Rates

2020 ◽  
Author(s):  
M S Eichenbaum ◽  
B K Johannsen ◽  
S T Rebelo
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Exchange Rates ◽  
Real Exchange Rate ◽  
Open Economy ◽  
Real Exchange Rates ◽  
Nominal Exchange Rate ◽  
Medium Size ◽  
Inflation Rates ◽  
Nominal Exchange Rates

Abstract This article studies how the monetary policy regime affects the relative importance of nominal exchange rates and inflation rates in shaping the response of real exchange rates to shocks. We document two facts about inflation-targeting countries. First, the current real exchange rate predicts future changes in the nominal exchange rate. Second, the real exchange rate is a poor predictor of future inflation rates. We estimate a medium-size, open-economy DSGE model that accounts quantitatively for these facts as well as other empirical properties of real and nominal exchange rates. The key estimated shocks that drive the dynamics of exchange rates and their covariance with inflation are disturbances to the foreign demand for dollar-denominated bonds.

The Stabilization of an Open Economy with Capital Controls: An Analysis Using Malaysian Data

2003 ◽  
Vol 2 (3) ◽  
pp. 63-83 ◽  
Author(s):  
Naoyuki Yoshino ◽  
Sahoko Kaji ◽  
Yoko Ibuka
Keyword(s):  
Exchange Rate ◽  
Exchange Rates ◽  
Open Economy ◽  
Exchange Rate Volatility ◽  
Capital Controls ◽  
Loss Functions ◽  
Economic Welfare ◽  
Real Gdp ◽  
Net Exports ◽  
Fixed Exchange Rates

The purpose of this paper is to analyze the effectiveness of capital controls and fixed exchange rates in improving economic welfare. We apply Malaysian data to our theoretical model and derive the following results for the period of our estimation. High exchange rate volatility negatively affects Malaysian net exports and real GDP. By stabilizing the exchange rate and recovering monetary policy autonomy, capital controls and fixed exchange rates can lead to lower values of loss functions. This beneficial effect is stronger, the more open the Malaysian economy.

The U.S. and the emergence of flexible exchange rates: an analysis of foreign policy change

1979 ◽  
Vol 33 (1) ◽  
pp. 57-81 ◽  
Author(s):  
John S. Odell
Keyword(s):  
Exchange Rate ◽  
Exchange Rates ◽  
Policy Change ◽  
Exchange Rate Flexibility ◽  
Bretton Woods ◽  
Mixed Regime ◽  
International Monetary Arrangements ◽  
Foreign Policy Change ◽  
Flexible Exchange Rates ◽  
The U.S

International monetary arrangements in effect since the Bretton Woods conference of 1944 underwent major changes in the early 1970s, most notably from the norm and practice of “fixed” exchange rates to a new mixed regime in which major rates are now flexible. The outcome strongly reflected the external monetary behavior of the U.S. government, which changed dramatically with the “Nixon shocks” of August 1971 and again with a second devaluation of the dollar in February 1973. Since then the U.S. has officially advocated the once-heretical policy of exchange-rate flexibility.

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