Does monetary policy stabilize the exchange rate following a currency crisis?

This paper provides evidence on the relationship between rnonetary policy and the exchange rate in the aftermath of currency crises. It ana1yzes a large data set of currency crises in 80 countries in the period 1980 to 1998. The rnain question addressed is: can rnonetary policy significantly alter the probability of reversing the post-crisis undervaluation through nominal appreciation rather than higher int1ation? We find that tight rnonetary policy facilitates the reversal of currency undervaluation through nominal appreciation rather than inflation. When the econorny is also facing a banking crisis, depending on the specification, tight rnonetary policy rnay not have the same effect.

Monetary policy, default risk and the exchange rate

In a country with high probability of default, higher interest rates may render the currency less attractive if sovereign default is costly. This paper develops that intuition in a simple model and estimates the effect of changes in interest rates on the exchange rate in Brazil using data from the dates surrounding the monetary policy committee meetings and the methodology of identification through heteroskedasticity. Indeed, we find that unexpected increases in interest rates tend to lead the Brazilian currency to depreciate. It follows that granting more independence to a central bank that focus solely on inflation is not always a free-lunch.

Evidence for a respiratory component, similar to mammalian respiratory sinus arrhythmia, in the heart rate variability signal from the rattlesnake, Crotalus durissus terrificus

Autonomic control of heart rate variability and the central location of vagal preganglionic neurones (VPN) were examined in the rattlesnake ( Crotalus durissus terrificus), in order to determine whether respiratory sinus arrhythmia (RSA) occurred in a similar manner to that described for mammals. Resting ECG signals were recorded in undisturbed snakes using miniature datalogging devices, and the presence of oscillations in heart rate (f(H)) was assessed by power spectral analysis (PSA). This mathematical technique provides a graphical output that enables the estimation of cardiac autonomic control by measuring periodic changes in the heart beat interval. At fH above 19 min(-1) spectra were mainly characterised by low frequency components, reflecting mainly adrenergic tonus on the heart. By contrast, at f(H) below 19 min(-1) spectra typically contained high frequency components, demonstrated to be cholinergic in origin. Snakes with a f(H) > 19 min(-1) may therefore have insufficient cholinergic tonus and/or too high an adrenergic tonus acting upon the heart for respiratory sinus arrhythmia ( RSA) to develop. A parallel study monitored f(Hd) simultaneously with the intraperitoneal pressures associated with lung inflation. Snakes with a fH < 19 min(-1) exhibited a high frequency (HF) peak in the power spectrum, which correlated with ventilation rate (f(V)). Adrenergic blockade by propranolol infusion increased the variability of the ventilation cycle, and the oscillatory component of the f(H) spectrum broadened accordingly. Infusion of atropine to effect cholinergic blockade abolished this HF component, confirming a role for vagal control of the heart in matching f(H) and f(V) in the rattlesnake. A neuroanatomical study of the brainstem revealed two locations for vagal preganglionic neurones (VPN). This is consistent with the suggestion that generation of ventilatory components in the heart rate variability (HRV) signal are dependent on spatially distinct loci for cardiac VPN. Therefore, this study has demonstrated the presence of RSA in the HRV signal and a dual location for VPN in the rattlesnake. We suggest there to be a causal relationship between these two observations.

The monetary crisis, dollarization and the exchange rate

Includes bibliography

Inflation targeting works well in Latin America

Includes bibliography

México: evolución económica durante 2007 y perspectivas para 2008

Incluye Bibliografía

The employment situation in Latin America and the Caribbean: Crisis, stabilization and reactivation: performance of the labour market in 2009

Following a five-year period during which economic and social performance in Latin America and the Caribbean surpassed anything seen in recent decades, the global economic and financial crisis not only hurt macroeconomic variables but also impacted heavily on labour markets in the region’s countries. Between 2003 and 2008 employment rates had risen considerably, especially in the formal sector, but the crisis spelled a reversal of this trend. Nevertheless, the region was better prepared than it had been in previous crises, since it had achieved a sound fiscal footing, a good level of international reserves and low rates of inflation. This meant that the authorities had the space to implement countercyclical policies on both fiscal and monetary levels. Be this as it may, faced with the worst global crisis since the Great Depression of the 1930s, these measures could only attenuate the impact on the region’s economies —they could not prevent it altogether. Furthermore, the crisis struck with notable differences among subregions and countries depending on the nature of their trade integration, and not all the countries had the fiscal space to implement vigorous countercyclical policies. As discussed in this third ECLAC/ILO bulletin, the crisis did less damage to the region’s labour markets than had been feared at the beginning of last year, thanks to the implementation of public policies geared towards employment, as reviewed in the two previous bulletins. This bulletin offers an additional analysis from the perspective of gender equality. Moreover, some countries in the region, notably Brazil, managed to rapidly stabilize and revive economic growth, with positive effects on labour variables. The fact remains, however, that millions in Latin America and the Caribbean lost their jobs or were obliged to accept more poorly paid employment in more precarious conditions. The macroeconomic data indicate that recovery is under way and is stronger and occurring more rapidly than foreseen one year ago. In fact, regional growth in 2010 may well exceed the 4.1% forecast at the end of 2009. Consequently, although the unemployment rate may be expected to record a modest drop, it may not return to pre-crisis levels. The upturn is taking many different forms in the countries of the region. In some, especially in South America, recovery has benefited from the buoyancy of the Asian economies, whose demand for natural resources has driven large increases in exports, in terms of both volume and price. Countries whose economies are closely tied to the United States economy are benefiting from the recovery there, albeit more slowly and with a certain lag. Conversely, some countries are still suffering from major disequilibria, which are hampering their economic reactivation. Lastly, Chile and Haiti were both victims of devastating earthquakes early in the year and are therefore facing additional challenges associated with reconstruction, on top of their efforts to sustain an economic upturn. Despite the relatively favourable outlook for regional growth in 2010, great uncertainty still surrounds the global economy’s recovery, which affects the region’s economic prospects over the longer term. The weakness of the recovery in some regions and the doubts about its sustainability in others, as well as shocks that have occurred in international financial markets, are warning signs which authorities need to monitor continuously because of the region’s close integration with the global economy. In addition, a return to growth does not directly or automatically mean higher employment rates —still less decent working conditions. Although some labour indicators have performed reasonably favourably since the end of last year, the countries still face daunting challenges in improving the labour market integration of millions in Latin America and the Caribbean who are not seeing the fruits of renewed growth. This is why it is important to learn the lessons arising from the policies implemented during the crisis to offset its impact on labour markets. With this third joint bulletin, ECLAC and ILO continue to pursue their objective of affording the region the information and analyses needed to face these challenges, as regards both trends in the region’s labour markets and the corresponding policy options.

Penetrance rate estimation in autosomal dominant conditions

Accurate estimates of the penetrance rate of autosomal dominant conditions are important, among other issues, for optimizing recurrence risks in genetic counseling. The present work on penetrance rate estimation from pedigree data considers the following situations: 1) estimation of the penetrance rate K (brief review of the method); 2) construction of exact credible intervals for K estimates; 3) specificity and heterogeneity issues; 4) penetrance rate estimates obtained through molecular testing of families; 5) lack of information about the phenotype of the pedigree generator; 6) genealogies containing grouped parent-offspring information; 7) ascertainment issues responsible for the inflation of K estimates.

Jarrow-Yildirim model for inflation: theory and applications

This thesis deals with inflation theory, focussing on the model of Jarrow & Yildirim, which is nowadays used when pricing inflation derivatives. After recalling main results about short and forward interest rate models, the dynamics of the main components of the market are derived. Then the most important inflation-indexed derivatives are explained (zero coupon swap, year-on-year, cap and floor), and their pricing proceeding is shown step by step. Calibration is explained and performed with a common method and an heuristic and non standard one. The model is enriched with credit risk, too, which allows to take into account the possibility of bankrupt of the counterparty of a contract. In this context, the general method of pricing is derived, with the introduction of defaultable zero-coupon bonds, and the Monte Carlo method is treated in detailed and used to price a concrete example of contract. Appendixes: A: martingale measures, Girsanov's theorem and the change of numeraire. B: some aspects of the theory of Stochastic Differential Equations; in particular, the solution for linear EDSs, and the Feynman-Kac Theorem, which shows the connection between EDSs and Partial Differential Equations. C: some useful results about normal distribution.

Using Leading Indicators to Forecast US Home Sales in a Bayesian VAR Framework

This paper uses Bayesian vector autoregressive models to examine the usefulness of leading indicators in predicting US home sales. The benchmark Bayesian model includes home sales, the price of homes, the mortgage rate, real personal disposable income, and the unemployment rate. We evaluate the forecasting performance of six alternative leading indicators by adding each, in turn, to the benchmark model. Out-of-sample forecast performance over three periods shows that the model that includes building permits authorized consistently produces the most accurate forecasts. Thus, the intention to build in the future provides good information with which to predict home sales. Another finding suggests that leading indicators with longer leads outperform the short-leading indicators.

Seawater carbonate chemistry, survival rate, shell size, calcification rate of the planktonic foraminifer Neogloboquadrina pachyderma (sinistral) in a laboratory experiment

The present study investigated the effects of ocean acidification and temperature increase on Neogloboquadrina pachyderma (sinistral), the dominant planktonic foraminifer in the Arctic Ocean. Due to the naturally low concentration of [CO3] 2- in the Arctic, this foraminifer could be particularly sensitive to the forecast changes in seawater carbonate chemistry. To assess potential responses to ocean acidification and climate change, perturbation experiments were performed on juvenile and adult specimens by manipulating seawater to mimic the present-day carbon dioxide level and a future ocean acidification scenario (end of the century) under controlled (in situ) and elevated temperatures (1 and 4 °C, respectively). Foraminifera mortality was unaffected under all the different experiment treatments. Under low pH, N. pachyderma (s) shell net calcification rates decreased. This decrease was higher (30 %) in the juvenile specimens than decrease observed in the adults (21 %) ones. However, decrease in net calcification was moderated when both, pH decreased and temperature increased simultaneously. When only temperature increased, a net calcification rate for both life stages was not affected. These results show that forecast changes in seawater chemistry would impact calcite production in N. pachyderma (s), possibly leading to a reduction of calcite flux contribution and consequently a decrease in biologic pump efficiency.

What Explains Real and Nominal Exchange Rate Fluctuations? Evidence from SVAR Analysis for India

This study empirically analyzes the sources of the exchange rate fluctuations in India by employing the structural VAR model. The VAR system consists of three variables, i.e., the nominal exchange rate, the real exchange rate, and the relative output of India and a foreign country. Consistent with most previous studies, the empirical evidence demonstrates that real shocks are the main drives of the fluctuations in real and nominal exchange rates, indicating that the central bank cannot maintain the real exchange rate at its desired level over time.

Restructuring the state budget system for disinflation and exchange rate unification in Myanmar

The installment of a new government has augmented the prospect for implementing disinflation and exchange rate unification in Myanmar. A close look at the state budget shows that the reform of the budget system for state economic enterprises (SEEs) is essential. Reforms need to hold the replacement of controlled prices including the official exchange rate with market prices in SEE operations, and the separation of the SEEs from the state budget. But separating the SEEs from the state budget will necessitate careful planning to cope with SEE bankruptcies which would imposes another fiscal burden on the government. Therefore, economic viability must be a criterion for the continuation of their operations.

Inflation-Targeting, Flexible Exchange Rates and Macroeconomic Performance since the Great Recession. CEPS Working Document No. 394, March 2014

Has inflation targeting (IT) conferred benefits in terms of economic growth on countries that followed this particular monetary policy strategy during the crisis period 2007-12? This paper answers this question in the affirmative. Countries with an IT monetary regime with flexible exchange rates weathered the crisis much better than countries with other monetary regimes, predominantly countries with fixed exchange rates. Part of this difference in growth performance reflects differences in export performance during the initial years of the crisis, which in turn can be explained by real exchange rate depreciations. However, IT seems also to confer other benefits on the countries above and beyond the effects from currency depreciation.

Analysis and forecast of truck traffic loads and the relative damage to pavement systems as a function of axle configurations. Final report.

Texas State Department of Highways and Public Transportation, Transportation Planning Division, Austin