[PDF] Understanding Real Exchange Rate Movements With Trade In Intermediate Products eBook

Author : David C. Parsley
Publisher :
Page : 26 pages
File Size : 42,56 MB
Release : 2012
Category :
ISBN :

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We suggest it may be quot;too easyquot; to attribute real exchange rate movements to law of one price deviations. We show that it is immaterial whether one uses seemingly traded goods, nontraded goods, or even just a single, unimportant consumer good, say beer. The ease of attributing the variation to any such deviations is explained using a model with intermediate goods trade. In the model, the stage of production determines the traded/nontraded distinction. We find empirical substantiation for the model: law of one price deviations lose explanatory power; and - defined appropriately in terms of intermediate goods - relative prices matter.

Author : International Monetary Fund
Publisher : International Monetary Fund
Page : 132 pages
File Size : 22,14 MB
Release : 2004-05-19
Category : Business & Economics
ISBN : 1498330282

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Author : Nagwa Riad
Publisher : International Monetary Fund
Page : 87 pages
File Size : 25,56 MB
Release : 2012-01-15
Category : Business & Economics
ISBN : 1463973101

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Changing Patterns of Global Trade outlines the factors underlying important shifts in global trade that have occurred in recent decades. The emergence of global supply chains and their increasing role in trade patterns allowed emerging market economies to boost their inputs in high-technology exports and is associated with increased trade interconnectedness.The analysis points to one important trend taking place over the last decade: the emergence of China as a major systemically important trading hub, reflecting not only the size of trade but also the increase in number of its significant trading partners.

Author : Mr.Gian Milesi-Ferretti
Publisher : International Monetary Fund
Page : 38 pages
File Size : 43,79 MB
Release : 1994-02-01
Category : Business & Economics
ISBN : 1451922515

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This paper attempts to provide a perspective on real exchange rate developments following the inception of the EMS. The focus is on structural determinants of real exchange rates, notably the behavior of tradables and nontradable prices and productivity. It is found that changes in the relative price of tradable goods in terms of nontradables account for a sizable fraction of real exchange rate dynamics during the EMS period. Sectoral productivity growth differential help explain the behavior of the relative price of tradable goods, especially in the long run. There is also some evidence that the EMS has extended on relative price behavior.

Author : Michael B. Devereux
Publisher :
Page : 56 pages
File Size : 19,1 MB
Release : 2006
Category : Foreign exchange administration
ISBN :

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This paper develops a view of exchange rate policy as a trade-off between the desire to smooth fluctuations in real exchange rates so as to reduce distortions in consumption allocations, and the need to allow flexibility in the nominal exchange rate so as to facilitate terms of trade adjustment. We show that optimal nominal exchange rate volatility will reflect these competing objectives. The key determinants of how much the exchange rate should respond to shocks will depend on the extent and source of price stickiness, the elasticity of substitution between home and foreign goods, and the amount of home bias in production. Quantitatively, we find the optimal exchange rate volatility should be significantly less than would be inferred based solely on terms of trade considerations. Moreover, we find that the relationship between price stickiness and optimal exchange rate volatility may be non-monotonic.

Author : Caroline M. Betts
Publisher :
Page : 39 pages
File Size : 45,81 MB
Release : 2008
Category : Foreign exchange rates
ISBN :

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We study the quarterly bilateral real exchange rate and the relative price of non-traded to traded goods for 1225 country pairs over 1980-2005. We show that the two variables are positively correlated, but that movements in the relative price measure are smaller than those in the real exchange rate. The relation between the two variables is stronger when there is an intense trade relationship between two countries and when the variance of the real exchange rate between them is small. The relation does not change for rich/poor country bilateral pairs or for high inflation/low inflation country pairs. We identify an anomaly: The relation between the real exchange rate and relative price of non-traded goods for US/EU bilateral trade partners is unusually weak.

Author : Mary E. Burfisher
Publisher : Cambridge University Press
Page : 443 pages
File Size : 42,36 MB
Release : 2016
Category : Business & Economics
ISBN : 1107132207

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The book provides a hands-on introduction to computable general equilibrium (CGE) models, written at an accessible, undergraduate level.

Author : Takatoshi Ito
Publisher : University of Chicago Press
Page : 441 pages
File Size : 39,51 MB
Release : 2008-09-15
Category : Business & Economics
ISBN : 0226387089

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The imbalanced, yet mutually beneficial, trading relationship between the United States and Asia has long been one of international finance’s most perplexing mysteries. Although the United States continues to post a substantial trade deficit—and China reaps the benefits of a surplus—the dollar has yet to sink in the face of ever-increasing account disparities. International Financial Issues in the Pacific Rim explains why the United States enjoys a seemingly symbiotic relationship with its trading partners despite stark inequities in the trade balance, especially with Asia. This timely and well-informed study also debunks the assumed link between economic openness and low inflation in the region, identifies the serious gap between academic and private-sector researchers’ understanding of exchange rate volatility, and analyzes the liberalization of Asian capital accounts. International Financial Issues in the Pacific Rim will have broad implications for global trade and economic policy issues in Asia and beyond.