FTA in international finance : impacts of exchange rates on FTA utilization

This paper investigates how exchange rates affect the utilization of a free trade agreement (FTA) scheme in trading. Changes in exchange rates affect FTA utilization by two ways. The first way is by changing the excess profits gained by utilizing the FTA scheme, and the second way is by promoting the compliance of rules of origin. Our theoretical models predict that the depreciation of exporters' currency against that of importers enhances the likelihood of FTA utilization through those two channels. Furthermore, our empirical analysis, which is based on rich tariff-line-level data on the utilization of FTA schemes in Korea's imports from ASEAN countries, supports the theoretical prediction. We also show that the effects are smaller for more differentiated products.

The Exchange Rate in a Dynamic-Optimizing Current Account Model with Nominal Rigidities: a Quantitative Investigation.

This paper studies a dynamic-optimizing model of a semi-small open economy with sticky nominal prices and wages. the model exhibits exchange rate overshooting in response to money supply shocks. the predicted variability of nominal and real exchange rates is roughly consistent with that of G7 effective exchange rates during the post-Bretton Woods era.

Étude de l'efficacité de la dévaluation du franc CFA au Bénin

This paper examines the effectiveness of CFA franc devaluation in Benin. Our results show that the nominal devaluation generate a real exchange depreciation, thanks to strict anti-inflation measures implemented.

The Euro as an International Currency: explaining puzzling first evidence from the foreign exchange markets

This paper presents evidence that the bid-ask spreads in euro rates increased relative to the corresponding bid-ask spreads in the German mark (DM) prior to the creation of the currency union. This comes with a decrease in transaction volume in the euro rates relative to the previous DM rates. The starkest example is the DM(euro)/yen rate in which the spread has risen by almost two-thirds while the volume decreased by more than one third. This outcome is surprising because the common currency concentrated market liquidity in fewer external euro rates and higher volume tends to be associated with lower spreads. We propose a microstructure explanation based on a change in the information environment of the FX market. The elimination of many cross currency pairs increased the market transparency for order flow imbalances in the dealership market. It is argued that higher market transparency adversely affects the inventory risk sharing efficiency of the dealership market and induces the observed euro spread increase and transaction volume shortfall.

The Effect of Exchange Rate Volatility on International Trade: The Implication for Production Networks in East Asia

This paper is an empirical investigation of the relationship between exchange rate volatility and international trade, focusing on East Asia. It finds that intra-East Asian trade is discouraged by exchange rate volatility more seriously than trade in other regions because intermediate goods trade in production networks, which is quite sensitive to exchange rate volatility compared with other types of trade, occupies a significant fraction of trade. In addition, this negative effect of volatility is mainly induced by the unanticipated volatility and has an even greater impact than that of tariffs.

Essays in International Finance and Macroeconomics

Thesis (Ph.D.)--University of Washington, 2016-08

Bid-ask spreads and volatility in the foreign exchange market. An empirical analysis

Consistent with the implications from a simple asymmetric information model for the bid-ask spread, we present empirical evidence that the size of the bid-ask spread in the foreign exchange market is positively related to the underlying exchange rate uncertainty. The estimation results are based on an ordered probit analysis that captures the discreteness in the spread distribution, with the uncertainty of the spot exchange rate being quantified through a GARCH type model. The data sets consists of more than 300,000 continuously recorded Deutschemark/dollar quotes over the period from April 1989 to June 1989. © 1994.

A multivariate generalized ARCH approach to modeling risk premia in forward foreign exchange rate markets

Assuming that daily spot exchange rates follow a martingale process, we derive the implied time series process for the vector of 30-day forward rate forecast errors from using weekly data. The conditional second moment matrix of this vector is modelled as a multivariate generalized ARCH process. The estimated model is used to test the hypothesis that the risk premium is a linear function of the conditional variances and covariances as suggested by the standard asset pricing theory literature. Little supportt is found for this theory; instead lagged changes in the forward rate appear to be correlated with the 'risk premium.'. © 1990.

Foreign exchange reserves in India and China

Professor Irma Glicman Adelman, an Irish Economist working in California University at Berkely, in her research work on ‘Development Over Two Centuries’, which is published in the Journal of Evolutionary Economics, 1995, has identified that India, along with China, would be one of the largest economies in this 21st Century. She has stated that the period 1700 - 1820 is the period of Netherlands, the period 1820 - 1890 is the period of England the period 1890 - 2000 is the period of America and this 21st Century is the century of China and India. World Bank has also identified India as one of the leading players of this century after China. India will be third largest economy after USA and China. India will challenge the Global Economic Order in the next 15 years. India will overtake Italian economy in 2015, England economy in 2020, Japan economy in 2025 and USA economy in 2050 (China will overtake Japan economy in 2016 and USA economy in 2027). India has the following advantages compared with other economies. India is 4th largest GDP in the world in terms of Purchasing Power. India is third fastest growing economy in the world after China and Vietnam. Service sector contributes around 57% of GDP. The share of agriculture is around 17% and Manufacture is 16% in 2005 - 2006. This is a character of a developed country. Expected GDP growth rate is 10% shortly (It has come down from 9.2% in 2006 - 2007 to 6.2% during 2008 - 2009 due to recession. It is only a temporary phenomenon). India has $284 billion as Foreign Exchange Reserve as on today. India had just $1 billion as Foreign Exchange Reserve when it opened its economy in the year 1991. In this research paper an attempt has been made to study the two booming economies of the globe with respect to their foreign exchange reserves. This study mainly based on secondary data published by respective governments and various studies done on this area

Developing world debt policy [microform] : hearing before the Subcommittee on International Finance, Trade, and Monetary Policy of the Committee on Banking, Finance, and Urban Affairs, House of Representatives, One-hundredth Congress, second session, July 13, 1988.

"Serial no. 100-80."

Oversight of U.S. trade policy : joint hearings before the Subcommittee on International Trade of the Committee on Finance and the Subcommittee on International Finance and Monetary Policy of the Committee on Banking, Housing, and Urban Affairs, United States Senate, Ninety-seventh Congress, first session...

Pt. 2: "July 13 and 28, 1981."