Chapter Eleven. The International Monetary System
|
|
- Arnold Smith
- 6 years ago
- Views:
Transcription
1
2 Chapter Eleven The International Monetary System
3 Introduction 11-3 The international monetary system refers to the institutional arrangements that govern exchange rates. Floating exchange rates occur when the foreign exchange market determines the relative value of a currency The world s four major currencies dollar, euro, yen, and pound are all free to float against each other
4 Introduction 11-4 Pegged exchange rates occur when the value of a currency is fixed relative to a reference currency Dirty float occurs when countries hold the value of their currency within a range of a reference currency Fixed exchange rate occurs when a set of currencies are fixed against each other at some mutually agreed upon exchange rate Pegged exchange rates, dirty floats and fixed exchange rates all require some degree of government intervention
5 The Gold Standard 11-5 Roots in old mercantile trade Inconvenient to ship gold, changed to paperredeemable for gold Want to achieve balance-of-trade equilibrium Japan Gold Trade USA
6 Balance of Trade Equilibrium 11-6 Decreased money supply = price decline. Trade Surplus As prices decline, exports increase and trade goes into equilibrium. Gold Increased money supply = price inflation.
7 Between the Wars 11-7 Post WWI, war heavy expenditures affected the value of dollars against gold US raised dollars to gold from $20.67 to $35 per ounce - Dollar worth less? Other countries followed suit and devalued their currencies
8 Bretton Woods 11-8 In 1944, 44 countries met in New Hampshire Countries agreed to peg their currencies to US$ which was convertible to gold at $35/oz Agreed not to engage in competitive devaluations for trade purposes and defend their currencies Weak currencies could be devalued up to 10% w/o approval Created the IMF and World Bank
9 International Monetary Fund 11-9 The International Monetary Fund (IMF) Articles of Agreement were heavily influenced by the worldwide financial collapse, competitive devaluations, trade wars, high unemployment, hyperinflation in Germany and elsewhere, and general economic disintegration that occurred between the two world wars The aim of the IMF was to try to avoid a repetition of that chaos through a combination of discipline and flexibility
10 International Monetary Fund Discipline - Maintaining a fixed exchange rate imposes monetary discipline, curtails inflation - Brake on competitive devaluations and stability to the world trade environment Flexibility - Lending facility: Lend foreign currencies to countries having balance-ofpayments problems - Adjustable parities: Allow countries to devalue currencies more than 10% if balance of payments was in fundamental disequilibrium
11 Role of the World Bank The official name for the world bank is the International Bank for Reconstruction and Development Purpose: To fund Europe s reconstruction and help 3rd world countries. Overshadowed by Marshall Plan, so it turns towards development - Lending money raised through WB bond sales Agriculture Education Population control Urban development
12 Collapse of the Fixed Exchange System The system of fixed exchange rates established at Bretton Woods worked well until the late 1960 s - The US dollar was the only currency that could be converted into gold - The US dollar served as the reference point for all other currencies - Any pressure to devalue the dollar would cause problems through out the world
13 Collapse of the Fixed Exchange System Factors that led to the collapse of the fixed exchange system include - President Johnson financed both the Great Society and Vietnam by printing money - High inflation and high spending on imports - On August 8, 1971, President Nixon announces dollar no longer convertible into gold - Countries agreed to revalue their currencies against the dollar - On March 19, 1972, Japan and most of Europe floated their currencies - In 1973, Bretton Woods fails because the key currency (dollar) is under speculative attack
14 The Floating Exchange Rate The Jamaica agreement revised the IMF s Articles of Agreement to reflect the new reality of floating exchange rates - Floating rates acceptable - Gold abandoned as reserve asset - IMF quotas increased IMF continues role of helping countries cope with macroeconomic and exchange rate problems
15 Exchange Rates Since Exchange rates have been more volatile for a number of reasons including: - Oil crisis Loss of confidence in the dollar Oil crisis 1979, OPEC increases price of oil - Unexpected rise in the dollar Rapid fall of the dollar and Partial collapse of European Monetary System Asian currency crisis
16 Long-Term Exchange Rate Trends From
17 Fixed Versus Floating Exchange Rates Floating: - Monetary policy autonomy Restores control to government - Trade balance adjustments Adjust currency to correct trade imbalances Fixed: - Monetary discipline -.Speculation - Limits speculators - Uncertainty - Predictable rate movements - Trade balance adjustments - Argue no link between exchange rates and trade Link between savings and investment
18 Exchange Rate Regimes Pegged Exchange Rates - Peg own currency to a major currency ($) - Popular among smaller nations - Evidence of moderation of inflation Currency Boards - Country commits to converting domestic currency on demand into another currency at a fixed exchange rate - Country holds foreign currency reserves equal to 100% of domestic currency issued
19 Exchange Rate Policies for IMF Members
20 Crisis Management by the IMF The IMF s activities have expanded because periodic financial crises have continued to hit many economies - Currency crisis When a speculative attack on a currency s exchange value results in a sharp depreciation of the currency s value or forces authorities to defend the currency - Banking crisis Loss of confidence in the banking system leading to a run on the banks - Foreign debt crisis When a country cannot service its foreign debt obligations
21 Incidence of Currency and Banking Crises
22 Mexican Currency Crisis of Peso pegged to U.S. dollar Mexican producer prices rise by 45% without corresponding exchange rate adjustment Investments continued ($64B between ) Speculators began selling pesos and government lacked foreign currency reserves to defend it IMF stepped in
23 Russian Ruble Crisis Financial markets loss of confidence in Russia s ability to meet national and international payments - Led to loss of international reserves and roll over of treasury bills reaching maturity Financial markets unable to determine who s in charge
24 Russian Ruble Crisis Persistent decline in value of ruble: - High inflation Artificial low prices in Communist era Shortage of goods Liberalized price controls - Too many rubles chasing too few goods - Growing public-sector debt Refusal to raise taxes to pay for government
25 Government Actions: Exacerbating the Situation Defacto devaluation of the ruble Unilateral restructuring of ruble-denominated public debt 90-day moratorium on foreign credits repayment Hike in interest rates to defend ruble Duma rejects measures designed to alleviate problems
26 Decline of the Ruble
27 The Asian Crisis Factors leading to the Asian financial crisis of The investment boom - Excess capacity - The debt bomb - Expanding imports
28 The Asian Crisis Mid 1997 several key Thai financial institutions were on the verge of default - Result of speculative overbuilding - Excess investment (dollar denominated debt) - Deteriorating balance-of payments position Thailand asks IMF for help billion in loans, given with restrictive conditions Following devaluation of Thai baht speculation hit other Asian currencies - Malaysia, Singapore, Indonesia, and Korea
29 Problems in Asian Market Economies Cronyism Too much money, dependence on speculative capital inflows Lack of transparency in the financial sector Currencies tied to strengthening dollar Increasing current account deficits Weakness in the Japanese economy
30 Evaluating the IMF Policy Prescriptions Inappropriate policies - The IMF s one-size-fits-all approach to macroeconomic policy is inappropriate for many countries Moral hazard - People behave recklessly when they know they will be saved if things go wrong Lack of Accountability - The IMF has become too powerful for an institution that lacks any real mechanism for accountability
31 Implications for Managers Currency management Business strategy - Faced with uncertainty about the future value of currencies, firms should utilize the forward exchange market to insure against exchange rate risk - Firms should pursue strategies that will increase the company s strategic flexibility in the face of unpredictable exchange rate movements that is, to pursue strategies that reduce the economic exposure of the firm Corporate-government relations
32 Looking Ahead to Chapter The Strategy of International Business - Strategy and the Firm - Global Expansion, Profitability, and Profit Growth - Cost Pressures and Pressures for Local Responsiveness - Choosing a Strategy
Chapter 18. The International Financial System Intervention in the Foreign Exchange Market
Chapter 18 The International Financial System 18.1 Intervention in the Foreign Exchange Market 1) A central bank of domestic currency and corresponding of foreign assets in the foreign exchange market
More informationY669 International Political Economy. September 21, 2010
Y669 International Political Economy September 21, 2010 What is an exchange rate? The price of a currency expressed in terms of other currencies or gold. What the International Monetary System Has to Do
More informationEconomics of Money, Banking, and Fin. Markets, 10e (Mishkin) Chapter 18 The International Financial System
Economics of Money, Banking, and Fin. Markets, 10e (Mishkin) Chapter 18 The International Financial System 18.1 Intervention in the Foreign Exchange Market 1) A central bank of domestic currency and corresponding
More informationThe International Monetary System
The International Monetary System Eiteman et al., Chapter 2 Winter 2004 Outline of the Chapter Currency Terminology History of the International Monetary System Contemporary Currency Regimes Emerging Markets
More informationAsian Financial Crisis. Jianing Li/Wei Ye/Jingyan Zhang 2018/11/29
Asian Financial Crisis Jianing Li/Wei Ye/Jingyan Zhang 2018/11/29 Causes--Current account deficit 1. Liberalization of capital markets. 2. Large capital inflow due to the interest rates fall in developed
More informationTo Fix or Not to Fix?
To Fix or Not to Fix? Linda Tesar, Department of Economics Notes at: http://www.econ.lsa.umich.edu/~ltesar April 5, 2000 Fixed vs. Flexible Exchange rates The Theory: Money demand: M/P = L(Y,I) Interest
More informationPrepared by Iordanis Petsas To Accompany. by Paul R. Krugman and Maurice Obstfeld
Chapter 22 Developing Countries: Growth, Crisis, and Reform Prepared by Iordanis Petsas To Accompany International Economics: Theory and Policy, Sixth Edition by Paul R. Krugman and Maurice Obstfeld Chapter
More informationChapter 18. The International Financial System
Chapter 18 The International Financial System Unsterilized Foreign Exchange Intervention Federal Reserve System Assets Liabilities Federal Reserve System Assets Liabilities Foreign Assets -$1B Currency
More informationPrepared by Iordanis Petsas To Accompany. by Paul R. Krugman and Maurice Obstfeld
Chapter 18 The International Monetary System, 1870-19731973 Prepared by Iordanis Petsas To Accompany International Economics: Theory and Policy, Sixth Edition by Paul R. Krugman and Maurice Obstfeld Chapter
More informationChapter 19 International Monetary Systems: An Historical Overview
Chapter 19 International Monetary Systems: An Historical Overview Copyright 2012 Pearson Addison-Wesley. All rights reserved. Preview Goals of macroeconomic policies internal and external balance Gold
More informationCurrency Crises: Theory and Evidence
Currency Crises: Theory and Evidence Lecture 3 IME LIUC 2008 1 The most dramatic form of exchange rate volatility is a currency crisis when an exchange rate depreciates substantially in a short period.
More informationWeek 1. Currency Systems and Crises
Week 1 Currency Systems and Crises Definition An exchange rate is the amount of currency that one needs in order to buy one unit of another currency, or the amount of currency that one receive when selling
More informationBretton Woods Intentional Interdependence Bretton Woods New Hampshire. I.M.F.
Bretton Woods- 1944 Intentional Interdependence Bretton Woods New Hampshire. U.S. and U.K. established funds and rules with U.S. dollar to be the reserve currency. I.M.F. Created to facilitate a return
More informationBretton Woods Intentional Interdependence. Bretton Woods New Hampshire. I.M.F.
Bretton Woods- 1944 Intentional Interdependence Bretton Woods New Hampshire. U.S. and U.K. established funds and rules with U.S. dollar to be the reserve currency. I.M.F. Created to facilitate a return
More informationLecture 6: Intermediate macroeconomics, autumn Lars Calmfors
Lecture 6: Intermediate macroeconomics, autumn 2009 Lars Calmfors 1 Topics Systems of fixed exchange rates Interest rate parity under a fixed exchange rate Stabilisation policy under a fixed exchange rate
More informationPOLI 12D: International Relations Sections 1, 6
POLI 12D: International Relations Sections 1, 6 Spring 2017 TA: Clara Suong Chapter 9 International Monetary Relations 9 INTERNATIONAL MONETARY RELATIONS Core of the Analysis National Monetary Order Fixed
More informationChapter 21 The International Monetary System: Past, Present, and Future
Chapter 21 The International Monetary System: Past, Present, and Future "...for the international economy the existence of a well-functioning financial system assuring efficient exchange is as important
More informationThe Evolution of the International Monetary System. Professor Keith Pilbeam City University, London
The Evolution of the International Monetary System Professor Keith Pilbeam City University, London The Postwar International Monetary System some highlights Bretton Woods 1949-72 sets up IMF, fixes dollar
More informationEconS 327 Test 2 Spring 2010
1. Credit (+) items in the balance of payments correspond to anything that: a. Involves payments to foreigners b. Decreases the domestic money supply c. Involves receipts from foreigners d. Reduces international
More information4/14/2011. Exchange Rate Policy and Devaluation. The Central Bank Balance Sheet. Central Bank Policy Options in a Crisis
Exchange Rate Policy and Devaluation BOP Surpluses: excess supply of Forex CB buys BOP Deficits: excess demand for Forex CB sells OSB must offset BOP ISLM-FX with an unexpected devaluation ISLM-FX with
More informationThe International Monetary System
The International Monetary System 11 Learning objectives Describe the historical development of the modern global monetary system. Explain the role played by the World Bank and the IMF in the international
More information3/9/2010. Topics PP542. Macroeconomic Goals (cont.) Macroeconomic Goals. Gold Standard. Macroeconomic Goals (cont.) International Monetary History
Topics PP542 International Monetary History Goals of macroeconomic policies Gold standard International monetary system during 98-939 Bretton Woods system: 944-973 Collapse of the Bretton Woods system
More informationThe Asian Financial Crisis
The Asian Financial Crisis The Asian crisis 1996 Miraculous growth in EA But some signs of worsening current accounts in Korea and Thailand Signs of worsening financial institutions in Thailand 1997 January
More informationChapter 19 (8) International Monetary Systems: An Historical Overview
Chapter 19 (8) International Monetary Systems: An Historical Overview Preview Goals of macroeconomic policies internal and external balance Gold standard era 1870 1914 International monetary system during
More informationThe International Monetary System
INTERNATIONAL FINANCIAL MANAGEMENT Fourth Edition EUN / RESNICK The International Monetary System 2 Chapter Two INTERNATIONAL Chapter Objective: FINANCIAL MANAGEMENT This chapter serves to introduce the
More informationChapter 6. Government Influence on Exchange Rates. Lecture Outline
Chapter 6 Government Influence on Exchange Rates Lecture Outline Exchange Rate Systems Fixed Exchange Rate System Freely Floating Exchange Rate System Managed Float Exchange Rate System Pegged Exchange
More informationInternational Finance
International Finance 19 1 Balance of Payments International economic transactions Flow of transactions period of time May not involve cash payments Double-entry bookkeeping Credits Inflow of receipts
More informationIntroduction to Economics. MACROECONOMICS Chapter 6 International Economics
Introduction to Economics MACROECONOMICS Chapter 6 International Economics contents 6.1 6.2 6.3 6.4 6.5 6.6 Theory of Comparative Advantage Gains from International Trade Trade Barriers Balance of Payments
More informationWelcome to: International Finance
Welcome to: International Finance Introduction & International Monetary System Reading: Chapter 1 (p1-3) & Chapter 2 Why is International Finance Important? ٣ Why is International Finance Important? In
More informationREFORMING WORLD FINANCE. Lessons from a crisis
REFORMING WORLD FINANCE Lessons from a crisis The IMF has been attacked for its handling of the world s economic and financial troubles. Here its deputy managing director, Stanley Fischer, responds WHEN
More informationDeveloping Countries Chapter 22
Developing Countries Chapter 22 1. Growth 2. Borrowing and Debt 3. Money-financed deficits and crises 4. Other crises 5. Currency board 6. International financial architecture for the future 1 Growth 1.1
More informationWhat is Wrong with Market-Oriented Policies?
June 2003 In 1999, SigmaBleyzer initiated the International Private Capital Task Force (IPCTF) in Ukraine. Its objective was to benchmark transition economies to identify best practices in government policies
More information4. INTERNATIONAL MONETARY SYSTEMS AND BALANCE OF PAYMENTS
4. INTERNATIONAL MONETARY SYSTEMS AND BALANCE OF PAYMENTS CHAPTER OVERVIEW INTERNATIONAL MONETARY SYSTEM HISTORY PERFORMANCE OF INTERNATIONAL MONETARY SYSTEMS EUROPEAN MONETARY SYSTEMS INTERNATIONAL DEBT
More informationGovernment Intervention during the Asian Crisis
Government Intervention during the Asian Crisis From 990 to 997, Asian countries achieved higher economic growth than any other countries. They were viewed as models for advances in technology and economic
More informationInternational Monetary System
International Monetary System From The Exchange Rate Regime to International Monetary System International Economic Policy Finance and Development (LM-81), a.a. 2016-2017 Prof. Emanuele Ragusi Presentation
More informationInternational Currency Experiences: National and Global Choices. International currency experiences in the 20th C. Choices for an exchange rate system
International Currency Experiences: National and Global Choices International currency experiences in the 20th C.» The Gold Standard period» The interwar 1920-1930 period» The Bretton Woods period» Post
More informationEconomic Dynamics and Integration in Eastern Europe and Asia Lecture Winter semester 2017/18
Economic Dynamics and Integration in Eastern Europe and Asia Lecture Winter semester 2017/18 Chair for Macroeconomic Theory and Politics Schumpeter School of Business and Economics Bergische Universität
More informationDevaluation as a Reason for Economical Growth or Crisis
International Journal of Economics and Finance; Vol. 9, No. 2; 2017 ISSN 1916-971X E-ISSN 1916-9728 Published by Canadian Center of Science and Education Devaluation as a Reason for Economical Growth or
More informationReplies to memo questions, 09/09/03
Replies to memo questions, 09/09/03 Dear Students, As you know, we did not cover the balance of payments so I ll skip the answer to my question on it. Your answers to the second question (why currency
More informationThe Asian Crisis: Causes and Cures IMF Staff
June 1998, Volume 35, Number 2 The Asian Crisis: Causes and Cures IMF Staff The financial crisis that struck many Asian countries in late 1997 did so with an unexpected severity. What went wrong? How can
More informationInternational Economics
International Economics 7th edition Theo S. Eicher, John H. Mutti, and Michelle H. Turnovsky O Routledge jjj^ Taylor & Francis Croup LONDON AND NEW YORK List of Case Studies xiii List of Boxes %p List
More informationEast Asia Crisis of Econ October 8, Team 5 Bryan Darch Svend Egholm Paramdeep Singh Sarah Zullo
East Asia Crisis of 1997 Econ 7920 October 8, 2008 Team 5 Bryan Darch Svend Egholm Paramdeep Singh Sarah Zullo The East Asian currency crisis of 1997 caused severe distress for the countries of East Asia
More informationSuggested Solutions to Problem Set 4
Department of Economics University of California, Berkeley Spring 2006 Economics 182 Suggested Solutions to Problem Set 4 Problem 1 : True, False, Uncertain (a) False or Uncertain. In first generation
More informationLECTURE XIV. 31 July Tuesday, July 31, 12
LECTURE XIV 31 July 2012 TOPIC 16 Exchange Rates and Policy BIG PICTURE What are different common exchange rate systems? How can exchange rates be manipulated to affect a country s real variables? What
More informationAssignment 6. Deadline: July 29, 2005
ECON 1010C Principles of Macroeconomics Instructor: Sharif F. Khan Department of Economics Atkinson College York University Summer 2005 Assignment 6 Deadline: July 29, 2005 Part A Multiple-Choice Questions
More informationGlobal Business Economics. Mark Crosby SEMBA International Economics
Global Business Economics Mark Crosby SEMBA International Economics The balance of payments and exchange rates Understand the structure of a country s balance of payments. Understand the difference between
More informationFinancial Crises. Benjamin Graham. Videos in this lecture are from Kahn Academy
Financial Crises Videos in this lecture are from Kahn Academy Today s Plan An updated syllabus is posted Today s topics: Kahn Academy Videos on foreign currency reserves and speculative attacks The Asian
More informationL-3: BALANCE OF PAYMENT CRISES IRINA BUNDA MACROECONOMIC POLICIES IN TIMES OF HIGH CAPITAL MOBILITY VIENNA, MARCH 21 25, 2016
L-3: BALANCE OF PAYMENT CRISES IRINA BUNDA MACROECONOMIC POLICIES IN TIMES OF HIGH CAPITAL MOBILITY VIENNA, MARCH 21 25, 2016 THIS TRAINING MATERIAL IS THE PROPERTY OF THE JOINT VIENNA INSTITUTE (JVI)
More informationGovernments and Exchange Rates
Governments and Exchange Rates Exchange Rate Behavior Existing spot exchange rate covered interest arbitrage locational arbitrage triangular arbitrage Existing spot exchange rates at other locations Existing
More informationTest Bank Multinational Business Finance 14th Edition by Eiteman Stonehill Moffett
Test Bank Multinational Business Finance 14th Edition by Eiteman Stonehill Moffett Solutions Manual for Multinational Business Finance 14th Edition by David K. Eiteman, Arthur I. Stonehill, Michael H.
More information19.2 Exchange Rates in the Long Run Introduction 1/24/2013. Exchange Rates and International Finance. The Nominal Exchange Rate
Chapter 19 Exchange Rates and International Finance By Charles I. Jones International trade of goods and services exceeds 20 percent of GDP in most countries. Media Slides Created By Dave Brown Penn State
More informationTen Years Later-- A Look Back at the East Asian Currency Crisis
Ten Years Later-- A Look Back at the East Asian Currency Crisis Lawrence J. Lau, Ph. D. President and Ralph and Claire Landau Professor of Economics The Chinese University of Hong Kong and Kwoh-Ting Li
More informationInternational Trade. International Trade, Exchange Rates, and Macroeconomic Policy. International Trade. International Trade. International Trade
, Exchange Rates, and 1 Introduction Open economy macroeconomics International trade in goods and services International capital flows Purchases & sales of foreign assets by domestic residents Purchases
More informationExchange Rate Regimes and Monetary Policy: Options for China and East Asia
Exchange Rate Regimes and Monetary Policy: Options for China and East Asia Takatoshi Ito, University of Tokyo and RIETI, and Eiji Ogawa, Hitotsubashi University, and RIETI 3/19/2005 RIETI-BIS Conference
More informationIMF Stabilisation and Structural Adjustment Programmes Colette Murphy Junior Sophister
IMF Stabilisation and Structural Adjustment Programmes Colette Murphy Junior Sophister Is the IMF guilty of malpractice in treating the symptoms of its patients, rather than their underlying causes? In
More informationOther International Organizations: IMF, World Bank, WTO
Other International Organizations: IMF, World Bank, WTO IMF and World Bank part of establishment of an international economic regime- same time as U.N. created. IMF and World Bank (International Bank for
More informationChapter 22 (11) Developing Countries: Growth, Crisis, and Reform
Chapter 22 (11) Developing Countries: Growth, Crisis, and Reform Preview Snapshots of rich and poor countries Characteristics of poor countries Borrowing and debt in poor and middle-income economies The
More information5. Openness in Goods and Financial Markets: The Current Account, Exchange Rates and the International Monetary System
Fletcher School of Law and Diplomacy, Tufts University 5. Openness in Goods and Financial Markets: The Current Account, Exchange Rates and the International Monetary System Macroeconomics Prof. George
More informationThe International Financial System
The International Financial System Notes on Mishkin, Chapter 21 Leigh Tesfatsion Economics Department Iowa State University, Ames IA Last Revised: 27 April 2011 Key In-Class Discussion Questions Mishkin,
More informationSlides for International Finance Macroeconomic Policy (KOM Chapter 19)
Macroeconomic Policy (KOM Chapter 19) American University 2010-09-17 Preview Macroeconomic Policy Goals of macroeconomic policies Monetary standards Gold standard International monetary system during 1918-1939
More informationEvaluating the international monetary system and the availability to move towards one single global currency
Faculty of Commerce Graduate Studies Economics Department A Thesis Summary: Evaluating the international monetary system and the availability to move towards one single global currency Submitted by: Mohammed
More informationmacro macroeconomics Aggregate Demand in the Open Economy N. Gregory Mankiw CHAPTER TWELVE PowerPoint Slides by Ron Cronovich fifth edition
macro CHAPTER TWELVE Aggregate Demand in the Open Economy macroeconomics fifth edition N. Gregory Mankiw PowerPoint Slides by Ron Cronovich 2002 Worth Publishers, all rights reserved Learning objectives
More informationChapter 24 CRISES IN EMERGING MARKETS
Chapter 24 CRISES IN EMERGING MARKETS The previous chapter extended the IS-LM-BP model to accommodate high capital mobility. Chapter 24 applies that model to the crises that beset some middle-income countries
More informationTHE GLOBAL ECONOMY AND POLICY Macroeconomics in Context (Goodwin, et al.)
Chapter 14 THE GLOBAL ECONOMY AND POLICY Macroeconomics in Context (Goodwin, et al.) Chapter Overview This chapter will take you through the basics of international trade and finance. The chapter introduces
More informationInternational Monetary Relations
Part 1: Review the following multiple choice questions to check your understanding of the balance of payments and foreign exchange rates. Question 1: On the balance-of-payments statements, merchandise
More informationReview of. Financial Crises, Liquidity, and the International Monetary System by Jean Tirole. Published by Princeton University Press in 2002
Review of Financial Crises, Liquidity, and the International Monetary System by Jean Tirole Published by Princeton University Press in 2002 Reviewer: Franklin Allen, Finance Department, Wharton School,
More informationChapter 13 Exchange Rates, Business Cycles, and Macroeconomic Policy in the Open Economy
Chapter 13 Exchange Rates, Business Cycles, and Macroeconomic Policy in the Open Economy 1 Goals of Chapter 13 Two primary aspects of interdependence between economies of different nations International
More informationTHE IMF: INSTRUMENTS AND STRATEGIES. Lecture 4 LIUC 2008
THE IMF: INSTRUMENTS AND STRATEGIES Lecture 4 LIUC 2008 WHAT IS THE INTERNATIONAL MONETARY FUND? The IMF is an international cooperative financial institution. Each member deposits a sum of money into
More informationChapter 29 The Global Economy and Policy Principles of Economics in Context (Goodwin et al)
Chapter 29 The Global Economy and Policy Principles of Economics in Context (Goodwin et al) Chapter Overview This chapter will take you through the basics of international trade and finance. The chapter
More informationPOLICY PRESCRIPTIONS FOR EAST ASIA
POLICY PRESCRIPTIONS FOR EAST ASIA Masaru Yoshitomi* At the Asian Development Bank Institute in Tokyo, we recently produced policy recommendations about how to avoid another financial crisis and, if we
More informationTHE EAST ASIAN CRISIS: LESSONS FOR OIC COUNTRIES. Enver Hakan Konaç *
Journal of Economic Cooperation 21, 2 (2000) 15-44 THE EAST ASIAN CRISIS: LESSONS FOR OIC COUNTRIES Enver Hakan Konaç * The crisis, which erupted in Asia s financial markets in 1997, had severe effects
More information4: Exchange Rate Determination
4: Exchange Rate Determination Financial managers of MNCs that conduct international business must continuously monitor exchange rates because their cash flows are highly dependent on them. They need to
More informationChapter 18 (7) Fixed Exchange Rates and Foreign Exchange Intervention
Chapter 18 (7) Fixed Exchange Rates and Foreign Exchange Intervention Preview Balance sheets of central banks Intervention in the foreign exchange markets and the money supply How the central bank fixes
More informationJapanese Capital Market
Japanese Capital Market The objectives of the chapter are to provide an understanding of: o o o o o o Financial system reforms. The banking sector. Japanese government bonds. Corporate debt markets. Stock
More informationThe IMF s Unmet Challenges By Barry Eichengreen and Ngaire Woods, Journal of Economic Perspectives, Winter 2015 Introduction There is an important
The IMF s Unmet Challenges By Barry Eichengreen and Ngaire Woods, Journal of Economic Perspectives, Winter 2015 Introduction There is an important role for the IMF to play in solving information, commitment
More information1)International Monetary System
1) (International Monetary System) 2) 3) (Balance of Payments) 4) (Foreign Exchange Market) 5) Interest Rate Parity (IRP) 6) Covered Interest Arbitrage 1 1)International Monetary System 1.1 The Gold Standard
More informationStudy Questions. Lecture 13. Exchange Rates
Study Questions Page 1 of 5 Study Questions Lecture 13 Part 1: Multiple Choice Select the best answer of those given. 1. The statement the yen rose today from 121 to 117 makes sense because a. The U.S.
More information483 Subject Index. Global Depositiory Receipts, 250 Grassman s law, 148, 160
Subject Index Adjustabonos, 401-3 Agency for International Development, 100 American depository receipts (ADRs): considered as foreign securities, 250; traded on over-the-counter market, 245 Arbitrage:
More informationThe Economics of International Financial Crises 3. An Introduction to International Macroeconomics and Finance
Fletcher School of Law and Diplomacy, Tufts University The Economics of International Financial Crises 3. An Introduction to International Macroeconomics and Finance Prof. George Alogoskoufis Scope of
More information14.05 Intermediate Applied Macroeconomics Problem Set 5
14.05 Intermediate Applied Macroeconomics Problem Set 5 Distributed: November 15, 2005 Due: November 22, 2005 TA: Jose Tessada Frantisek Ricka 1. Rational exchange rate expectations and overshooting The
More informationWeek Fourteen. Bretton Woods, New Hampshire
Week Fourteen Linus Yamane Bretton Woods, New Hampshire July 1944 Delegates from 44 Allied nations meet Create the IMF and World Bank Establish the Bretton Woods System Lord Keynes addresses conference
More informationReform of China's Foreign Exchange Rate System -- How the Newly Adopted Managed Floating System Actually Works
Reform of China's Foreign Exchange Rate System -- How the Newly Adopted Managed Floating System Actually Works C. H. Kwan On July, 00, China announced that it would revalue the yuan by some % and shift
More information1. The international monetary system can be defined as the institutional framework within which
Chapter 02 International Monetary System Multiple Choice Questions 1. The international monetary system can be defined as the institutional framework within which A. international payments are made. B.
More informationStudy Questions. Lecture 13. Exchange Rates
Study Questions Page 1 of 5 Part 1: Multiple Choice Select the best answer of those given. Study Questions Lecture 13 1. The statement the yen rose today from 121 to 117 makes sense because a. The U.S.
More informationChapter 02 International Monetary System
Chapter 02 International Monetary System Multiple Choice Questions 1. The international monetary system can be defined as the institutional framework within which A. international payments are made. B.
More informationStudy Questions (with Answers) Lecture 13. Exchange Rates
Study Questions (with Answers) Page 1 of 5 Part 1: Multiple Choice Select the best answer of those given. Study Questions (with Answers) Lecture 13 1. The statement the yen rose today from 121 to 117 makes
More informationSPP 542 International Financial Policy South Korea s Next Step
SPP 542 International Financial Policy South Korea s Next Step Date: April 16, 2003 Written by: Tsutomu Hayafuji Mitsuru Ikeda Hironori Yamada 1. South Korean Economy Outlook From the mid-1960s to the
More informationChapter 18 (7) Fixed Exchange Rates and Foreign Exchange Intervention
Chapter 18 (7) Fixed Exchange Rates and Foreign Exchange Intervention Preview Balance sheets of central banks Intervention in the foreign exchange markets and the money supply How the central bank fixes
More informationOpen Economy AS/AD: Applications
Open Economy AS/AD: Applications Econ 309 Martin Ellison UBC Agenda and References Trilemma Jones, chapter 20, section 7 Euro crisis Jones, chapter 20, section 8 Global imbalances Jones, chapter 29, section
More informationPrepared by Iordanis Petsas To Accompany. by Paul R. Krugman and Maurice Obstfeld
Chapter 17 Fixed Exchange Rates and Foreign Exchange Intervention Prepared by Iordanis Petsas To Accompany International Economics: Theory and Policy, Sixth Edition by Paul R. Krugman and Maurice Obstfeld
More informationChapter 9 Essential macroeconomic tools. Baldwin&Wyplosz 2009 The Economics of European Integration, 3 rd Edition
Chapter 9 Essential macroeconomic tools 2 Background theory A quick refresher on basic macroeconomic principles Application of these principles to the question of exchange rate regimes 3 Output and prices
More informationStudy Questions (with Answers) Lecture 20 International Policies for Economic Development: Financial
Study Questions (with Answers) Page 1 of 5 Study Questions (with Answers) Lecture 20 International Policies for Economic Development: Financial Part 1: Multiple Choice Select the best answer of those given.
More informationChapter 3 Foreign Exchange Determination and Forecasting
Chapter 3 Foreign Exchange Determination and Forecasting Note: In the sixth edition of Global Investments, the exchange rate quotation symbols differ from previous editions. We adopted the convention that
More informationThe Open Economy Revisited: the Exchange-Rate Regime
C H A P T E R 12 : the Mundell-Fleming Model and the Exchange-Rate Regime MACROECONOMICS SIXTH EDITION N. GREGORY MANKIW PowerPoint Slides by Ron Cronovich 2008 Worth Publishers, all rights reserved In
More informationStudy Questions (with Answers) Lecture 13. Exchange Rates
Study Questions (with Answers) Page 1 of 5 Part 1: Multiple Choice Select the best answer of those given. Study Questions (with Answers) Lecture 13 1. The statement the yen rose today from 121 to 117 makes
More information3. If the price of a British pound increases from $1.50 per pound to $1.80 per pound, we say that:
STUDY GUIDE FINAL ECO41 FALL 2013 UDAYAN ROY Ch 13 National Income Accounting See the questions in Homework 7 and Homework 8. CHAPTER 14 Exchange Rates and Interest Parity 1. How many dollars would it
More informationThe Financial Crisis, Global Imbalances, and the
The Financial Crisis, Global Imbalances, and the International Monetary System David Vines Oxford University, Australian National University, and CEPR ICRIER-CEPII-BRUEGEL Conference on International Cooperation
More informationFundamentals of Multinational Finance, 5e (Moffett et al.) Chapter 2 The International Monetary System. Multiple Choice and True/False Questions
Fundamentals of Multinational Finance 5th Edition Moffett Test Bank Full Download: http://testbanklive.com/download/fundamentals-of-multinational-finance-5th-edition-moffett-test-bank/ Fundamentals of
More information302 The US China trade dispute
Index absorption approach 143 5 adjustable peg 25, 27 adjustment mechanism 27 aggregate demand 246 aggregate demand management 37 aggregate spending approach, see absorption approach Agreement on Subsidies
More informationCurrency Asymmetry, Global Imbalance, and the Needed Reform of Global Monetary System
Currency Asymmetry, Global Imbalance, and the Needed Reform of Global Monetary System FAN Gang National Economic Research Institute China Reform Foundation May 2006 1.China s trade balance In most of past
More information