A Faith-Based Initiative Meets the Evidence: Does a Flexible Exchange Rate Regime Really Facilitate Current Account Adjustment?

2013 ◽  
Vol 95 (1) ◽  
pp. 168-184 ◽  
Author(s):  
Menzie D. Chinn ◽  
Shang-Jin Wei
Keyword(s):  
Exchange Rate ◽  
Current Account ◽  
Exchange Rate Regime ◽  
Flexible Exchange Rate ◽  
Faith Based ◽  
Current Account Adjustment

scholarly journals Current Account Dynamics, Adjustment and Capital Mobility in Bangladesh

2013 ◽  
Vol 2 (2) ◽  
pp. 117-126
Author(s):  
Mohammad Masud Alam ◽  
Rezai Karim Khondker ◽  
Mohammad Shahansha Molla
Keyword(s):  
Exchange Rate ◽  
Current Account ◽  
Capital Market ◽  
Capital Mobility ◽  
Market Integration ◽  
Exchange Rate Regime ◽  
Flexible Exchange Rate ◽  
Policy Implications ◽  
Current Account Dynamics ◽  
Real Shocks

This paper examines current account (CA) dynamics, its relationship with the degree of capital mobility and the state of integration of the Bangladesh capital market with the global capital market. For the period 1976-2012, findings of AR (1) process shows a rigid CA position along with its slow adjustment and its inflexibility against real shocks, lower degree of capital mobility and a slow progress of capital market integration with the rest of the world. Compared to the period of fixed exchange rate regime, lesser degree of  rigidity has been observed during the flexible exchange rate period suggesting a smooth and flexible current account position; but shows an increased degree of rigidity and capital immobility for the overall time period under consideration. These findings reveal some important policy implications in respects of current and capital account liberalization, deregulation of domestic markets and removing entry barriers on the part of Bangladesh to boost up FDI and remittance inflows.  

scholarly journals FLEKSIBILITAS NILAI TUKAR DAN PENYESUAIAN TRANSAKSI BERJALAN DI INDONESIA: ANALISIS THRESHOLD VAR

2018 ◽  
Vol 4 (2) ◽  
pp. 112-139
Author(s):  
Farhana Zahrotunnisa ◽  
Iman Sugema ◽  
Toni Bakhtiar
Keyword(s):  
Exchange Rate ◽  
Current Account ◽  
Current Account Deficit ◽  
Exchange Rate Regime ◽  
Exchange Rate Flexibility ◽  
Exchange Rate Variability ◽  
Monetary Authorities ◽  
Actual Exchange ◽  
The Relationship ◽  
Current Account Adjustment

Estimation study about the relationship between exchange rate flexibility and current account adjustment has been through three stages, the first stage was analysis of correlation among exchange rates variability (proxied by REER and NEER) and exchange rate regimes classification. The second step was estimating the relationship that the former was mentioned with VAR as benchmark model. The third step was applying the nonlinear estimation with Threshold VAR. The results of analysis showed that exchange rate regime classification may not capture actual exchange rate variability and flexibility exchange rate can accelerate current account adjustment in Indonesia if the changes of Indonesia exchange rate less than 27.7059 (low regime) whereas in high regime exchange rate is persistent increasing so that the system between exchange rate and current account become unstable. Bank Indonesia as monetary authorities must keep the changes of exchange rate less than 27.7059, due to exchange rate can affect current account adjustment, so can anticipate if there is current account deficit in Indonesia economy.  Keywords : Exchange Rate Flexibility, Current Account Adjustment, Exchange Rate Regime, Classification, Threshold VAR

scholarly journals FLEKSIBILITAS NILAI TUKAR DAN PENYESUAIAN TRANSAKSI BERJALAN DI INDONESIA: ANALISIS THRESHOLD VAR

2018 ◽  
Vol 4 (2) ◽  
pp. 112-139
Author(s):  
Farhana Zahrotunnisa ◽  
Iman Sugema ◽  
Toni Bakhtiar
Keyword(s):  
Exchange Rate ◽  
Current Account ◽  
Current Account Deficit ◽  
Exchange Rate Regime ◽  
Exchange Rate Flexibility ◽  
Exchange Rate Variability ◽  
Monetary Authorities ◽  
Actual Exchange ◽  
The Relationship ◽  
Current Account Adjustment

Estimation study about the relationship between exchange rate flexibility and current account adjustment has been through three stages, the first stage was analysis of correlation among exchange rates variability (proxied by REER and NEER) and exchange rate regimes classification. The second step was estimating the relationship that the former was mentioned with VAR as benchmark model. The third step was applying the nonlinear estimation with Threshold VAR. The results of analysis showed that exchange rate regime classification may not capture actual exchange rate variability and flexibility exchange rate can accelerate current account adjustment in Indonesia if the changes of Indonesia exchange rate less than 27.7059 (low regime) whereas in high regime exchange rate is persistent increasing so that the system between exchange rate and current account become unstable. Bank Indonesia as monetary authorities must keep the changes of exchange rate less than 27.7059, due to exchange rate can affect current account adjustment, so can anticipate if there is current account deficit in Indonesia economy.  Keywords : Exchange Rate Flexibility, Current Account Adjustment, Exchange Rate Regime, Classification, Threshold VAR

scholarly journals Angola

2019 ◽  
Vol 19 (170) ◽  
pp. 1
Author(s):  
Keyword(s):  
Exchange Rate ◽  
Current Account ◽  
Current Account Deficit ◽  
Exchange Rate Regime ◽  
Oil Prices ◽  
Flexible Exchange Rate ◽  
Policy Response ◽  
Growth Recovery ◽  
Alternative Sources ◽  
Oil Revenues

A 36-month Extended Arrangement under the Extended Fund Facility (hereafter the “arrangement”) was approved last December, with access of SDR 2,673 million (361 percent of quota). Lower international oil prices would reduce oil revenues, widen the current account deficit, and stymie growth recovery. The authorities are implementing a proper policy response to the weakened outlook, through a conservative supplementary budget for 2019, alternative sources of cheaper financing, and progress toward a more flexible exchange rate regime.

A General Trend Analysis of India’s Current Account Balance

2014 ◽  
Vol 1 (1) ◽  
Author(s):  
Phool Chand
Keyword(s):  
Exchange Rate ◽  
Current Account ◽  
General Trend ◽  
Exchange Rate Regime ◽  
Flexible Exchange Rate ◽  
Current Account Balance ◽  
Positive Growth ◽  
Major Shift ◽  
Merchandise Trade ◽  
Negative Growth

With economic liberalization in India, a major shift on the foreign exchange front was in the form of switching from a fixed exchange rate regime to flexible exchange rate regime. This shift led to some heavy and sudden fluctuations in the prices and volumes of exports and imports. The present study is an attempt to analyse the overall trends in India’s current account balance during the period 1970-71 to 2010-11. The analysis shows that merchandise trade did not play any role towards the improvements of current account balance. In fact, it deteriorated the current account balance during the time span of the study. On the other hand, invisibles as a whole showed a very small negative growth rate which in effect is negligible. Income head has led buoyancy to current account balance. The overall positive growth of current account balance is basically an indication of good management of current account balance.

scholarly journals Exchange Rate Misalignment And Current Account Sustainability: The Australian Experience

2011 ◽  
Vol 2 (3) ◽  
Author(s):  
Francois Hermet ◽  
Jean-Francois Hoarau ◽  
Alain Nurbel
Keyword(s):  
Exchange Rate ◽  
Current Account ◽  
Current Account Deficit ◽  
Exchange Rate Regime ◽  
Flexible Exchange Rate ◽  
Real Effective Exchange Rate ◽  
Current Account Sustainability ◽  
Effective Exchange ◽  
Australian Experience ◽  
The Current Account

Australia’s persistent current account deficit engenders lively debates about its intertemporal solvency. This paper aims at showing whether there is really a misalignment of the $A real effective exchange rate ($A REER) and, if it is the case, at wondering about its real influence on the current account of Australia. The estimation of our empirical model puts forward a misalignment of the $A REER, but at the same time allows to emphasise the reduction in the magnitude of the misalignment since the adoption of the flexible exchange rate regime. Adding the stabilisation of the current account deficit, although recurrent, results in lending support to the Australian current account sustainability commonly held view.

scholarly journals Exchange rate regime choice

2006 ◽  
Vol 53 (3) ◽  
pp. 313-334 ◽  
Author(s):  
Emilija Beker
Keyword(s):  
Decision Making ◽  
Exchange Rate ◽  
Shelf Life ◽  
Exchange Rate Regime ◽  
Flexible Exchange Rate ◽  
Point Of View ◽  
External Factors ◽  
Advantages And Disadvantages ◽  
Complex Process ◽  
Highly Sensitive

The choice of an adequate exchange rate regime proves to be a highly sensitive field within which the economic authorities present and confirm themselves. The advantages and disadvantages of fixed and flexible exchange rate regimes, which have been quite relativized from the conventional point of view, together with simultaneous, but not synchronized effects of structural and external factors, remain permanently questioned throughout a complex process of exchange rate regime decision making. The paper reflects the attempt of critical identification of the key exchange rate performances with emphasis on continuous non-uniformity and (un)certainty of shelf life of a relevant choice.

scholarly journals EXCHANGE RATE FLEXIBILITY, CAPITAL MOBILITY AND INFLATION TRANSMISSION IN MALAYSIA

2009 ◽  
Vol 8 (1) ◽  
Author(s):  
Mansor H. Ibrahim
Keyword(s):  
Exchange Rate ◽  
Capital Mobility ◽  
Exchange Rate Regime ◽  
Flexible Exchange Rate ◽  
International Transmission ◽  
Exchange Rate Flexibility ◽  
The Us ◽  
Small Economy ◽  
Inflation Transmission ◽  
Limited Exchange

The paper assesses the international transmission of inflation for a small economy, Malaysia, over three sample periods marked by different degrees of exchange rate flexibility. Contradicting to conventional wisdom of less pronounced foreign nominal influences under the flexible exchange rate regime, this research finds evidence that the inflation transmission from the US to Malaysia is strongest during the period marked by increasing exchange rate flexibility (i.e. 1993-1998). This research also observes significant inflation effects of exchange rate depreciation during the same period. While this research observe less pronounced impacts of the US during the limited exchange rate flexibility period (i.e. 1988-1999), the US influences are virtually absent during the recent fixed regime (i.e. 1998-2005). This research believes that the intensity of capital flows across the three periods might have explained the results.

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