The Flow Formulation of the Money Market Equilibrium for an Open Economy and the Determination of the Exchange Rate

1989 ◽  
pp. 191-217 ◽  
Author(s):  
S.C. Tsiang
Keyword(s):  
Exchange Rate ◽  
Open Economy ◽  
Market Equilibrium ◽  
Money Market ◽  
The Exchange Rate

The long-run stability of a small, open economy under crawling peg regime

2002 ◽  
Vol 52 (1) ◽  
pp. 57-78
Author(s):  
S. Çiftçioğlu
Keyword(s):  
Exchange Rate ◽  
Open Economy ◽  
Risk Premium ◽  
Small Open Economy ◽  
Exchange Rate Policy ◽  
Price Stability ◽  
Output Stability ◽  
Long Run ◽  
The Exchange Rate ◽  
The Impact

The paper analyses the long-run (steady-state) output and price stability of a small, open economy which adopts a “crawling-peg” type of exchange-rate regime in the presence of various kinds of random shocks. Analytical and simulation results suggest that with the exception of money demand shocks, an exchange rate policy which involves a relatively higher rate of indexation of the exchange rate to price level is likely to lead to the worsening of price stability for all types of shocks. On the other hand, the impact of adopting such a policy on output stability depends on the type of the shock; for policy shocks to the exchange rate and shocks to output demand, output stability is worsened whereas for the shocks to risk premium of domestic assets, supply price of domestic output and the wage rate, better output stability is achieved in the long run.

scholarly journals A Theory of Foreign Exchange Interventions

2021 ◽  
Author(s):  
Sebastián Fanelli ◽  
Ludwig Straub
Keyword(s):  
Exchange Rate ◽  
Central Bank ◽  
Interest Rates ◽  
Open Economy ◽  
Small Open Economy ◽  
Bond Markets ◽  
Pecuniary Externality ◽  
Optimal Intervention ◽  
The Exchange Rate ◽  
Intervention Policy

Abstract We study a real small open economy with two key ingredients (1) partial segmentation of home and foreign bond markets and (2) a pecuniary externality that makes the real exchange rate excessively volatile in response to capital flows. Partial segmentation implies that, by intervening in the bond markets, the central bank can affect the exchange rate and the spread between home- and foreign-bond yields. Such interventions allow the central bank to address the pecuniary externality, but they are also costly, as foreigners make carry trade profits. We analytically characterize the optimal intervention policy that solves this trade-off: (1) the optimal policy leans against the wind, stabilizing the exchange rate; (2) it involves smooth spreads but allows exchange rates to jump; (3) it partly relies on “forward guidance,” with non-zero interventions even after the shock has subsided; (4) it requires credibility, in that central banks do not intervene without commitment. Finally, we shed light on the global consequences of widespread interventions, using a multi-country extension of our model. We find that, left to themselves, countries over-accumulate reserves, reducing welfare and leading to inefficiently low world interest rates.

scholarly journals PERANAN KEBIJAKAN MONETER DALAM MENJAGA STABILITAS PEREKONOMIAN INDONESIA SEBAGAI RESPON TERHADAP FLUKTUASI PEREKONOMIAN DUNIA

2007 ◽  
Vol 9 (2) ◽  
pp. 145-177
Author(s):  
M. Maulana Al Arif ◽  
Achmad Tohari
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Interest Rate ◽  
Open Economy ◽  
Small Open Economy ◽  
Monthly Data ◽  
Vector Autoregressive ◽  
The World ◽  
The Exchange Rate ◽  
The Impact

This paper analyzes the impact of the inflation and the world interest rate on the Indonesian economy and the effectiveness of the Indonesian central bank policy to adopt the domestic macroeconomic fluctuation.Assuming Indonesia as a small-open economy, the Stuctural Vector Autoregressive Model is utilized on the monthly data during the periode of 1999: 1 – 2004: 12 covering the main domestic macroeconomic indicator (output, price, money supply, interest rate and the exchange rate) and the world oil price and world interest rate as the disturbance source.The analysis provides 2 main results, first, the international variables do have impacts on the domestic variables fluctuation, implying the fragility of the domestic economy due to the external shock, second, the monetary policy is effective on supporting the economic growth and stabilizing the price level. However, the Bank Indonesia policy to stabilize the international shock via the exchange rate channel, contributes to a higher impact of the international shock on domestic interest rate.Keywords: monetary policy, business cycle, SVARJEL Classification: E52, E32, C32, F41

scholarly journals Indikator Kesejahteraan Petani melalui Nilai Tukar Petani (NTP) dan Pembiayaan Syariah sebagai Solusi

2018 ◽  
Vol 9 (1) ◽  
pp. 129
Author(s):  
Cut Muftia Keumala ◽  
Zamzami Zainuddin
Keyword(s):  
Exchange Rate ◽  
Exchange Rates ◽  
Consumer Goods ◽  
Agricultural Sector ◽  
Profit Sharing ◽  
Production Costs ◽  
Rice Farmers ◽  
The Exchange Rate ◽  
Good Determination

<p>As an agricultural country, attention to the welfare of farmers in Indonesia is considered very strategic. One of the measuring tools for farmers’ welfare that is used today is Farmer’s Exchange Rate (FER). This study aims to examine and explore some of the problems with the exchange rate experienced by farmers, including; Farmer’s Exchange Rate (FER) in identifying the welfare of farmers, determining the increase and decrease of Farmer Exchange Rate (FER) in Indonesia; and the potential of Islamic financing in providing solutions for the welfare of farmers. The results show that the increase in FER is not always good. Determination of the increase and decrease rice farmers’ exchange rates are productivity, grain prices, prices of consumer goods, and prices of fertilizers, the exchange rate of farmers on food and nonfood consumption, and production costs. Shariah schemes can be used as a new alternative to help the interest-free and profit-sharing agricultural sector.</p><p>Sebagai negara agraris perhatian terhadap kesejahteraan petani di Indonesia dinilai sangat strategis. Salah satu alat ukur kesejahteraan petani yang digunakan saat ini adalah Nilai Tukar Petani (NTP). Penelitian ini bertujuan untuk mengkaji dan menggali beberapa permasalahan terhadap nilai tukar yang dialami petani, antara lain; Nilai Tukar Petani (NTP) dalam mengindentifikasi kesejahteraan petani, penentu peningkatan dan penurunan Nilai Tukar Petani (NTP) pangan di Indonesia; dan potensi pembiayaan syariah dalam memberikan solusi untuk mensejahterakan petani. Hasil penelitian menunjukkan bahwa Kenaikan NTP tidak selalu baik. Penentu terjadinya kenaikan dan penurunan nilai tukar petani padi adalah produktivitas, harga gabah, harga barang konsumsi, dan harga pupuk, nilai tukar petani terhadap konsumsi makanan dan nonmakanan, serta biaya produksi. Skim syariah dapat dijadikan alternatif baru untuk membantu sektor pertanian yang bebas bunga dan berdasarkan bagi hasil.</p>

scholarly journals PRINSIP KEADILAN DAN KESEIMBANGAN DALAM PENENTUAN NILAI TUKAR BARANG (HARGA) PERSPEKTIF ISLAM DAN HUKUM PERLINDUNGAN KONSUMEN

2014 ◽  
Vol 6 (2) ◽  
Author(s):  
Iffaty Nasyiah
Keyword(s):  
Exchange Rate ◽  
Consumer Protection ◽  
Islamic Law ◽  
Consumer Rights ◽  
Production Values ◽  
The Law ◽  
The Exchange Rate ◽  
The Right

The Law No. 8 of 1999 about Consumer Protection Article 4 letter b said that one of consumer rights, namely the right to select and obtain goods in accordance with the exchange rate. Not found in authentic explanation regarding this exchange rate, if the exchange rate is the exchange rate that is in accordance with the agreement between the seller and the buyer, or in accordance with the production values or the exchange rate that corresponds to the price market, this then raises the question of free interpretation among the businessmen that the exchange rate is determined only by the desire of businessmen and weighing of benefits desired by businesses alone, so that entrepreneurs are allowed to set the exchange rate goods many times from the value of its production. In Islamic law is not found the rules regarding the determination of the limits of this exchange rate, but Islam is a tolerant religion, including in determining the exchange rate as the words of the Prophet Muhammad: "May Allah have mercy to a tolerant person (easy) when it sells, tolerant when buying, tolerant when fulfilling the obligation and tolerant when claiming its rights”. (HR. Bukhari from Jabir)

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