The Relationship Between U.S. Federal Reserve Discount Rate Changes and Fluctuations in Interest and Exchange Rates

1995 ◽  
Vol 21 (9) ◽  
pp. 37-49
Author(s):  
Christopher Hessel ◽  
Julie Dahlquist ◽  
Mark Persellin
Author(s):  
Jack Knight ◽  
James Johnson

Pragmatism and its consequences are central issues in American politics today, yet scholars rarely examine in detail the relationship between pragmatism and politics. This book systematically explores the subject and makes a strong case for adopting a pragmatist approach to democratic politics—and for giving priority to democracy in the process of selecting and reforming political institutions. What is the primary value of democracy? When should we make decisions democratically and when should we rely on markets? And when should we accept the decisions of unelected officials, such as judges or bureaucrats? This book explores how a commitment to pragmatism should affect our answers to such important questions. It concludes that democracy is a good way of determining how these kinds of decisions should be made—even if what the democratic process determines is that not all decisions should be made democratically. So, for example, the democratically elected U.S. Congress may legitimately remove monetary policy from democratic decision-making by putting it under the control of the Federal Reserve. This book argues that pragmatism offers an original and compelling justification of democracy in terms of the unique contributions democratic institutions can make to processes of institutional choice. This focus highlights the important role that democracy plays, not in achieving consensus or commonality, but rather in addressing conflicts. Indeed, the book suggest that democratic politics is perhaps best seen less as a way of reaching consensus or agreement than as a way of structuring the terms of persistent disagreement.


1976 ◽  
Vol 50 (4) ◽  
pp. 503-513 ◽  
Author(s):  
Robert Craig West

Students of the origins and accomplishments of government regulation of economic activity have open suspected that the laws on which regulation is based were addressed to problems and conditions of the past that no longer prevailed, or — what is worse — assumptions about the “real world” that are highly unrealistic. This is Professor West's main conclusion about the Federal Reserve Act of 1913, especially as regards its discount rate and international exchange policies.


Risks ◽  
2018 ◽  
Vol 6 (4) ◽  
pp. 111 ◽  
Author(s):  
Angelo Corelli

The paper analyzes the relationship between the most popular cryptocurrencies and a range of selected fiat currencies, in order to identify any pattern and/or causality between the series. Cryptocurrencies are a hot topic in Finance due to their strict relationship with the Blockchain system they originate from and therefore are normally considered as part of the ongoing, world-wide financial revolution. This innovative study investigates this relationship for the first time by thoroughly investigating the data, their features, and the way they are interconnected. Results show very interesting results in terms of how concentrated the causality effect on some specific cryptocurrencies and fiat currencies is. The outcome is a clear and possibly explainable relationship between cryptocurrencies and Asian markets, while envisioning some kind of Asian effect.


Author(s):  
Natalie Chen ◽  
Wanyu Chung ◽  
Dennis Novy

Abstract Using detailed firm-level transactions data for UK imports, we find that invoicing in a vehicle currency is pervasive, with more than half of the transactions in our sample invoiced in neither sterling nor the exporter’s currency. We then study the relationship between invoicing currencies and the response of import unit values to exchange rate changes. We find that for transactions invoiced in a vehicle currency, import unit values are much more sensitive to changes in the vehicle currency than in the bilateral exchange rate. Pass-through therefore substantially increases once we account for vehicle currencies. This result helps to explain why UK inflation turned out higher than expected when sterling depreciated during the Great Recession and after the Brexit referendum. Finally, within a conceptual framework we show why bilateral exchange rates are not suitable for capturing exchange rate pass-through under vehicle currency pricing. Overall, our results help to clarify why the literature often finds a disconnect between exchange rates and prices when vehicle currencies are not accounted for.


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