Exchange rate regimes and macroeconomic performance in Argentina, Brazil and Mexico

Includes bibliography

The competitive real exchange-rate regime, inflation and monetary policy

Includes bibliography

Exchange-rate management in Brazil

Includes bibliography

Exchange rate regimes in the Caribbean

This document analyses exchange rate regimes in the Caribbean subregion. Caribbean exchange rate regimes are typified into hard and soft pegs. Hard pegs refer to those arrangements that maintain a constant value of the domestic currency in terms of the currency of a major trading partner. The Organisation of Eastern Caribbean States (OECS); economies established a monetary union in 1983. The Bahamas, Belize and Barbados also fixed the value of their domestic currency in relation to the United States dollar in the middle of the 1970s. Soft pegs are monetary arrangements characterized by a forcefully managed exchange rate. Three countries are included in this category, Guyana, Jamaica and Trinidad and Tobago

A first approach to the impact of the real exchange rate on industrial sectors in Colombia

Much has been said about possible symptoms of Dutch disease in Colombia in the wake of a marked upsurge in commodity prices and the significant real appreciation of the national currency. This paper examines whether the real effective exchange rate had an impact on industry during the period 2000-2010. Specifically, it evaluates the effect of the appreciation of the real exchange rate on the value added of 63 industrial sectors in Colombia using the Arellano and Bond (1991) generalized method of moments (gmm) estimator. Overall, our results confirm a negative relationship between real exchange rate appreciation and industry. The analysis showed that real exchange rate appreciation had a significant impact on the value added of 21 sectors: a negative effect for 18 sectors and a positive effect for 3 sectors.

Exchange-rate variations and the rate of inflation in emerging economies

This paper develops a structural general equilibrium model to analyse the reactions of the nominal exchange rate and the domestic price level to three types of external shock in emerging economies that have limited access to world capital markets. Although the results depend crucially on the type of external shock, each of the two national balance-sheet parameters considered here —the risk premium and the ratio of external indebtedness— exacerbates the reactions of the two endogenous variables without altering the degree of exchange-rate pass-through (erpt). Moreover, flatter Phillips curves, as observed today in many economies, tend to increase erpt. On the basis of these results, the authorities of emerging economies seeking to stabilize markets and limit erpt are advised to minimize the two risk parameters by applying a flexible inflation-targeting regime.

Exchange rate pass-through and inflation targets in Chile

Using quarterly data on the Chilean economy from 1986 to 2009, this article looks at the effect of gradual implementation of an inflation-targeting regime on exchange rate pass-through to prices. Initially, the introduction of inflation-targeting contributes to substantial reductions in the pass-through coefficient. However, in the second phase of implementation, once the monetary authority extends the policy horizon and introduces greater flexibility into the exchange rate system, the pass-through coefficient rises sharply. The findings of this study show that exchange rate pass-through to prices, in addition to being sensitive to the inflationary environment, is closely tied to the rules of the game that shape the monetary policy framework.

Brazilian exchange rate complexity: Financial crisis effects

With the financial market globalization, foreign investments became vital for the economies, mainly in emerging countries. In the last decades, Brazilian exchange rates appeared as a good indicator to measure either investors' confidence or risk aversion. Here, some events of global or national financial crisis are analyzed, trying to understand how they influenced the "dollar-real" rate evolution. The theoretical tool to be used is the Lopez-Mancini-Calbet (LMC) complexity measure that, applied to real exchange rate data, has shown good fitness between critical events and measured patterns. (C) 2011 Elsevier B.V. All rights reserved.

Exchange Market Pressure on the Pound-Dollar Exchange Rate: 1925-1931

An investigation of exchange market pressure against the pound sterling during the inter-war period. The main findings are that a) the behavior of UK fundamentals relative to those of the USA help to explain exchange market pressure against the pound; b) during the run up to devaluation in September 1931 the monetary authorities in the UK were acting to reduce domestic credit; but that c) additional pressure was brought against the pound from speculative sources. These findings relate to current thinking on the choice of exchange rate regime as even well behaved fundamentals may not be sufficient to sustain a currency on its peg.

Does Exchange Rate Risk Affect Exports Asymmetrically? Asian Evidence

The effects of exchange rate risk have interested researchers, since the collapse of fixed exchange rates. Little consensus exists, however, regarding its effect on exports. Previous studies implicitly assume symmetry. This paper tests the hypothesis of asymmetric effects of exchange rate risk with a dynamic conditional correlation bivariate GARCH(1,1)-M model. The asymmetry means that exchange rate risk (volatility) affects exports differently during appreciations and depreciations of the exchange rate. The data include bilateral exports from eight Asian countries to the US. The empirical results show that real exchange rate risk significantly affects exports for all countries, negative or positive, in periods of depreciation or appreciation. For five of the eight countries, the effects of exchange risk are asymmetric. Thus, policy makers can consider the stability of the exchange rate in addition to its depreciation as a method of stimulating export growth.

Export Promotion through Exchange Rate Policy: Exchange Rate Depreciation or Stabilization?

Exchange rate movements affect exports in two ways -- its depreciation and its variability (risk). A depreciation raises exports, but the associated exchange rate risk could offset that positive effect. The present paper investigates the net effect for eight Asian countries using a dynamic conditional correlation bivariate GARCH-M model that simultaneously estimates time varying correlation and exchange rate risk. Depreciation encourages exports, as expected, for most countries, but its contribution to export growth is weak. Exchange rate risk contributes to export growth in Malaysia and the Philippines, leading to positive net effects. Exchange rate risk generates a negative effect for six of the countries, resulting in a negative net effect in Indonesia, Japan, Singapore, Taiwan and a zero net effect in Korea and Thailand. Since the negative effect of exchange rate risk may offset, or even dominate, positive contributions from depreciation, policy makers need to reduce exchange rate fluctuation along with and possibly before efforts to depreciate the currency.