Exchange rate policies for the EFTAcountries in the 1990s by William H. Branson

Cover of: Exchange rate policies for the EFTAcountries in the 1990s | William H. Branson

Published by Centre for Economic Policy Research in London .

Written in English

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  • EFTA -- Economic policy.,
  • European Monetary System (Organisation).,
  • Foreign exchange -- European Free Trade Association countries.,
  • Foreign exchange -- Government policy -- European Free Trade Association countries.,
  • Monetary policy -- European Free Trade Association countries.,
  • Foreign exchange problem -- European Free Trade Association countries.,
  • Capital market -- European Free Trade Association countries.

Edition Notes

Book details

StatementWilliam H. Branson.
SeriesDiscussion paper series / Centre for Economic Policy Research -- no.586
ContributionsCentre for Economic Policy Research.
The Physical Object
Pagination33p. ;
Number of Pages33
ID Numbers
Open LibraryOL19104462M

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Exchange rates in the s: A review of prudent monetary and fiscal policies, effective financial regulation and supervision, and a more flexible nominal exchange rate. In an outstanding account of exchange rates inthe international monetary system, W. Max Corden considers the essential issues in international author takes as his model the macroeconomic situation of a country with an open economy, and explains the effects of domestic fiscal and monetary macroeconomic policy on exchange rates.

the exchange rate. In this chapter, I argue that G-3 exchange rate policies underwent a fundamental regime change in the s as oral interventions essentially replaced actual interventions as the primary policy tool for affect-ing exchange rates in both the United States and the euro area.

Downloadable (with restrictions). This paper reviews the exchange rate policy experience of the Nordic EFTA countries (Finland, Iceland, Norway and Sweden) since the early s.

The paper briefly describes the main features of the national economies of the Nordic EFTA countries in an international perspective and their exchange rate arrangements in particular, and then attempts to asses the.

This collection of papers, edited by Victor Argy and Paul De Grauwe, examines issues surrounding the choice of exchange rate regime in smaller industrial countries. It contains a comprehensive summary by Jacques J.

: International Monetary Fund. exchange rate that differs from its and Mark Salm on,The information content of a li mit order book: The case Technical trading profitability in foreign exchange markets in the Exchange rate policies come in a range of different forms listed in Figure 1: let the foreign exchange market determine the exchange rate; let the market set the value of the exchange rate most of the time, but have the central bank sometimes intervene to prevent fluctuations that seem too large; have the central bank guarantee a specific.

Get this from a library. The making of exchange rate policy in the s. [Jeffrey A Frankel; National Bureau of Economic Research.] -- This paper, written for an NBER conference on "American Economic Policy in the s," discusses the dollar from the standpoint, not of what moved the exchange rate or what policies might have been.

Exchange rate policies come in a range of different forms listed in Figure 1: let the foreign exchange market determine the exchange rate; let the market set the value of the exchange rate most of the time, but have the central bank sometimes intervene to prevent fluctuations that seem too large; have the central bank guarantee a specific exchange rate; or share a currency with other countries.

Flexible Exchange Rate System In a flexible exchange rate system, exchange rate is left free to be determined in the foreign exchange market by the forces of demand and supply. In this, central bank allows the exchange rate to adjust to equate the supply and demand for foreign exchange. In Octoberthe UK made the decision to join the Exchange Rate Mechanism (ERM) The ERM was a semi-fixed exchange rate mechanism.

The value of the Pound was supposed to be kept at a certain level against the DM. £1 = DM The lower limit for the exchange rate was DM 5 Exchange Rate Policy 1. Jefiey A. Frankel 2. Fred Bergsten 3. Michael Mussa 1. Je~ey A. Frankel The Making of Exchange Rate Policy in the s Although the s were the decade when foreign exchange rates broke free of the confines of the Bretton Woods system, under which governments since.

EXCHANGE RATES: CONCEPTS, MEASUREMENTS AND ASSESSMENT OF COMPETITIVENESS Bangkok Novem Rajan Govil, Consultant. This activity is supported by a grant from Japan. interest rate policy—might be undertaken with an exchange rate stance in mind.

But there is no explicit public promise to sustain any particular exchange rate. In addition to the exchange rate regime, monetary authorities make policies that influence the of the exchange rate—the curlevel - rency’s value.

Exchange Rates and Economic Policy in the 20th Century. DOI link for Exchange Rates and Economic Policy in the 20th Century. Exchange Rates and Economic Policy in the 20th Century book. The course of trade policy over the s was integrally shaped by the interaction with the overall state of the economy—as it had been, in mirror image, during the s.

Various governments have seen their budget deficits soar. Both policies have affected exchange rates, partly through market expectations. With a majority of exchange rates officially floating, exchange rate movements do not necessarily reflect official decisions as was the case in the s.

Official Exchange Rate Arrangements and Real Exchange Rate Behavior By Parsley, David C.; Popper, Helen A Journal of Money, Credit & Banking, Vol. 33, No. 4, November The domestic political economy of exchange rate policy Political factors within nations give rise to pressures for – or against – coordination and cooperation in the international arena.

This is because exchange rate policies involve tradeoffs with domestic distributional and political implications. The. Exchange rates, Treasury notes, and foreign exchange reserves offer three ways to measure the value of the dollar.

Although the government is powerful in influencing exchange rates, it is still forex trading that actually changes them. The chart below shows the. By the time the U.K.

joined the European Exchange Rate Mechanism init was over 9 percent. The Louvre Accord: International Cooperation to Support USD Exchange Rates. In Mayfinance ministers and central bank governors of the G5 countries, plus Italy and Canada, met in Tokyo.

By the time the Bank of Japan Act was passed inthe economy had been growing at 1 percent per annum or less sinceinflation had been at or below zero for most of the decade, and interest rates had fallen from 8 percent in to percent.

5 Inflation influences exchange rates: thus, Japan's persistently low inflation relative to. The world exchange rate systems of the world have it own history shows that the world community has in fact change from the fixed exchange rates system to floating exchange rate are different combinations of fixed exchange rate systems as well as floating exchange rates exist currently, the created for exchange rate regulating together with specific some economical.

An exchange rate regime is the way a monetary authority of a country or currency union manages the currency in relation to other currencies and the foreign exchange is closely related to monetary policy and the two are generally dependent on many of the same factors, such as economic scale and openness, inflation rate, elasticity of the labor market, financial market development.

2 The revaluation occurred during an intense two-year long debate, among scholars and political leaders about Chinese exchange rate policy, since American policy-makers have often complained that the yuan has long been significantly undervalued, giving China an unfair trade advantage.

Thus, China is blamed for a “currency manipulation” that induces job losses in the United States. Praise for Handbook of Exchange Rates “This book is remarkable.

I expect it to become the anchor reference for people working in the foreign exchange field.” —Richard K. Lyons, Dean and Professor of Finance, Haas School of Business, University of California Berkeley “It is quite easily the most wide ranging treaty of expertise on the forex market I have ever come across.

1. Introduction. The role of exchange rate policies for economic development is still largely debated. There are two central and interconnected issues regarding exchange rate policies in the macroeconomic literature on emerging economies in recent decades that relate to the links between the balance of payments and macro stability and growth: (i) the role that the exchange rate plays in.

The exchange rate as policy target The interaction between macroeconomic policy and exchange rates will depend on the extent to which the exchange rate is itself an object of policy.

This extent varies across countries, tending to reflect the degree of "openness" of economies. Exchange rate is one of the central factors that influence the monetary policies in developing countries.

A country can choose to make use of a fixed exchange rate (Single or Multi-currency peg), intermediate regime like (Adjustable or Crawling peg) or adopt a flexible exchange rate depending upon the supply rate of money and her monetary self-sufficiency.

Domestic inflation rate rising more than that of trading partners of Nigeria dealt further blow to the naira exchange rate—causing more exchange rate instability. The inflation was not helped by expansionary monetary and fiscal policies that fuelled demand pressure on foreign exchange in the face of persistent supply gaps and bottlenecks.

Government Influence. The U.S. government has various tools to influence the U.S. dollar exchange rate against foreign currencies. The nation's central bank—known as the Federal Reserve (Fed)—is an independent arm of the government.

It indirectly changes exchange rates when it raises or lowers the fed funds rate—the rate banks charge to lend to each other. Figure A Spectrum of Exchange Rate Policies. A nation may adopt one of a variety of exchange rate regimes, from floating rates in which the foreign exchange market determines the rates to pegged rates where governments intervene to manage the value of the exchange rate, to a common currency where the nation adopts the currency of another country or group of countries.

Currency substitution, dollarization or euroization (see English spelling differences) is the use of a foreign currency in parallel to or instead of the domestic currency.

Currency substitution can be full or partial. Most, if not all, full currency substitution has taken place after a major economic crisis, for example, Ecuador and El Salvador in Latin America and Zimbabwe in Africa.

The Federal Reserve Board of Governors in Washington DC. Board of Governors of the Federal Reserve System. The Federal Reserve, the central bank of the United States, provides the nation with a safe, flexible, and stable monetary and financial system.

Fixed exchange rate systems offer the advantage of predictable currency values—when they are working. But for fixed exchange rates to work, the countries participating in them must maintain domestic economic conditions that will keep equilibrium currency values close to the fixed rates.

Currently there are four exchange rates: First is the official one, called CENCOEX, and which charges bolivars to the dollar. It is only intended for the importation of food and medicine.

The next two exchange rates are SICAD I (12 bolivars per dollar) and SICAD 2 (50 bolivars per dollar); they assign dollars to enterprises that import all.

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Conversely, a decline in the effective exchange rate means a weakening of the home currency. The figure shows that, during the early s and the late s, the trade-weighted index for the dollar increased, indicating a strengthening of the dollar against its major trade partners.

But the overall trend since shows a weakening of the dollar. Floating/Flexible Exchange Rate 3. Managed Float 3. This is where a Government maintains a given exchange rate over a period of time. This could be for a few months or even years. In order to maintain the exchange rate at the stated level government uses fiscal and monetary policies to control aggregate demand.

Exchange rate, the price of a country’s money in relation to another country’s exchange rate is “fixed” when countries use gold or another agreed-upon standard, and each currency is worth a specific measure of the metal or other standard.

An exchange rate is “floating” when supply and demand or speculation sets exchange rates (conversion units). Robert Barro's Macroeconomics has become the classic textbook presentation of the equilibrium approach to macroeconomics. In its first four editions, this book has shown undergraduates how market-clearing models with strong microeconomic foundations can be used to understand real-world phenomena and to evaluate alternative macroeconomic policies.4/5(8).

The Brazilian system seems to me better than no attempt to change exchange rates but less good than an exchange rate that changes more rapidly” (). Exchange rates as nominal anchors: Chile and Israel.

During the s and s, a number of countries relied on fixed exchange rates as a way of controlling very rapid rate regime choices and choices of monetary and fiscal policy. Arguments for exchange rate targeting are reviewed. Under most circumstances and for most countries, a system of freely floating exchange rates is likely to be a better choice than attempting to peg the exchange rate.

Ó Published by Elsevier Science B.V. All rights.

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