The UK Economy

1995 ◽  
Vol 152 ◽  
pp. 9-28
Author(s):  
Garry Young
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Narrow Range ◽  
Inflationary Pressure ◽  
Effective Exchange ◽  
The Uk ◽  
Effective Exchange Rate

The sterling exchange rate was unusually stable in the two years following its departure from the ERM in September 1992. In effective terms it fluctuated within a fairly narrow range around an average of about 89 on the new effective exchange rate index and this was approximately the level at which it ended 1994. Since then it has depreciated by over 5 per cent and at the time of writing (11 May) there is some uncertainty as to whether it will fall further. This largely unexpected depreciation is of sufficient size to influence the development of the UK economy and in particular to increase the amount of inflationary pressure at a time when there are doubts about whether monetary policy has been tightened enough to deal with that which already exists.

scholarly journals Impacts of the monetary policy on the exchange rate: case study of Vietnam

2019 ◽  
Vol 26 (2) ◽  
pp. 220-237
Author(s):  
Van Anh Pham
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Interest Rate ◽  
Real Effective Exchange Rate ◽  
Content Type ◽  
Effective Exchange ◽  
Quantitative Results ◽  
The Exchange Rate ◽  
The Interest Rate ◽  
Effective Exchange Rate

Purpose The purpose of this paper is to evaluate and analyze impacts of the monetary policy (MP) – money aggregate and interest rate – on the exchange rate in Vietnam. Design/methodology/approach The study uses data over the period of 2008–2018 and applies the vector autoregression model, namely recursive restriction and sign restriction approaches. Findings The main empirical findings are as follows: a contraction of the money aggregate significantly leads to the real effective exchange rate (REER) depreciating and then appreciating; a tightening of the interest rate immediately causes the REER appreciating and then depreciating; and both the money aggregate and the interest rate strongly determine fluctuations of the REER. Originality/value The quantitative results imply that the MP affects the REER considerably.

Risk and the UK exchange rate

2008 ◽  
Vol 203 ◽  
pp. 54-56 ◽  
Author(s):  
Ray Barrell ◽  
Dawn Holland
Keyword(s):  
Exchange Rate ◽  
Fourth Quarter ◽  
The Past ◽  
Effective Exchange ◽  
The Uk ◽  
High Level ◽  
Effective Exchange Rate

Sterling has fallen markedly against other currencies in the past few months, and in January reached its lowest point against the euro (or its equivalent) since the last quarter of 1996, as we can see from figure 1, which uses the first three weeks of January 2008 as an indicator of the value that will be achieved in the whole first quarter. Sterling has also weakened against the dollar in the past few months, although it remains at a high level. In effective terms, sterling fell on average by 2.5 per cent in the fourth quarter, and in early January it was more than 6 per cent lower than the average for the previous quarter. The fall was largely unanticipated, and the effective exchange rate for the first quarter of 2008 is more than 7 per cent below where we assumed it would be in October 2007.

Equity Markets, Block Realignments and the UK Exchange Rate

2002 ◽  
Vol 181 ◽  
pp. 38-43 ◽  
Author(s):  
Ray Barrell
Keyword(s):  
Exchange Rate ◽  
Euro Area ◽  
Stock Markets ◽  
Equity Markets ◽  
Equity Prices ◽  
The Us ◽  
Effective Exchange ◽  
The Exchange Rate ◽  
The Uk ◽  
Effective Exchange Rate

In recent weeks, equity markets have been very weak and the euro exchange rate has risen by more than 10 per cent against the dollar. The UK's effective exchange rate has also depreciated, removing some, but not all, of the overvaluation we identified in the April Review. We report on recent movements in table 1, and their implications are discussed in the UK and World forecast chapters in this Review. To an extent the movements in the US stock markets and the exchange rate are linked, but there does seem to be some ‘excess strength’ in the euro, which will in turn contribute to the weakness of Euro Area equity prices.

scholarly journals Restoring international competitiveness in Croatia: The role of fiscal and monetary policy

2013 ◽  
Vol 58 (199) ◽  
pp. 39-55
Author(s):  
Tomislav Coric ◽  
Hrvoje Simovic ◽  
Milan Deskar-Skrbic
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Fiscal Policy ◽  
International Competitiveness ◽  
Real Effective Exchange Rate ◽  
Labour Costs ◽  
Unit Labour Costs ◽  
Effective Exchange ◽  
Effective Exchange Rate

Croatia has joined the European Union as a country with several substantial structural problems, of which the most important is weak competitiveness. Although competitiveness can be viewed from the ?institutional? perspective, which includes World Development Indicators (WDI) and Doing Business reports, in this paper the authors focus on the more standard view of competitiveness based on unit labour costs (ULC) and real effective exchange rate (REER). As a small, open and highly dollarized/euroised economy that has to coordinate its economic policy with the EU policy framework, Croatia has limited space for increasing international competitiveness using monetary policy measures aimed at (nominal) devaluation of the national currency. Therefore economic policy stakeholders should focus on decreasing unit labour costs and real effective exchange rate mainly through the process of internal devaluation, which is based on adequate fiscal policy measures. In this paper the authors analyse the role of monetary and fiscal policy in the deteriorating real effective exchange rate and unit labour costs since 2000, and their current capabilities and restrictions in restoring international competitiveness. The Structural VAR model (SVAR) is used to estimate the effects of foreign (banking) capital, credit growth, and current public expenditure on REER and ULC. The preliminary hypothesis of the paper is that monetary policy should continue to support bank lending activities and the role of fiscal policy is to achieve an internal devaluation, which will increase the competitiveness of the Croatian economy. Restoring international competitiveness is necessary due to its impact on net exports and consequently the economic recovery of the national economy, which has faced recession conditions for five years in a row. Also, restoring competitiveness is one of the most important preconditions for the success of a small country joining the single European market.

scholarly journals Modelling CAR Export from Slovakia to the United Kingdom - Vector Error Correction Approach

2019 ◽  
Vol 19 (4) ◽  
pp. 249-264
Author(s):  
Renáta Pitoňáková
Keyword(s):  
Exchange Rate ◽  
Error Correction ◽  
Industrial Production ◽  
Inflation Rate ◽  
Real Effective Exchange Rate ◽  
The United Kingdom ◽  
Long Run ◽  
Effective Exchange ◽  
The Uk ◽  
Effective Exchange Rate

Abstract The aim of the article is to identify determinants of export of road vehicles from Slovakia to the United Kingdom. The Error correction model is based on monthly data from January 2008 to November 2018. The modelling identifies short and long-run effects of real effective exchange rate, inflation rate and industrial production on foreign demand of transport equipment. The real effective exchange rate indicates competitiveness of domestic producers towards most important trade partners, inflation rate of Slovakia is a proxy for macroeconomic environment and industrial production of the UK stands in for the income variable. The results suggest that export of road vehicles is in the long-run impacted by exchange rate and industrial production. The appreciation of exchange rate reduces export from SR to the UK while rising income increases foreign demand. In the short-run trading with motor vehicles is impacted by all three explanatory variables. The Error correction term indicates that roughly 30 % of disequilibrium in the previous month will be corrected in the current month. The implications are for governing bodies to manage the current commodity framework which is at present mainly oriented on machinery and transport equipment and to support companies from other industries aiming to create more diversified export commodity structure.

Responses of Monetary Policy to Inflation, the Output Gap, and Real Exchange Rates: The Case of Australia, Canada, and New Zealand

2010 ◽  
Vol 10 (2) ◽  
pp. 1850196 ◽  
Author(s):  
Bruno S. Sergi ◽  
Yu Hsing
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
New Zealand ◽  
Inflation Targeting ◽  
Inflation Rate ◽  
Real Exchange Rates ◽  
Real Effective Exchange Rate ◽  
Output Gap ◽  
Effective Exchange ◽  
Effective Exchange Rate

This study shows that the policy rate reacts positively to the inflation rate, the output gap, and the lagged real effective exchange rate for Australia, Canada, and New Zealand and negatively to the current real effective exchange rate for Australia and Canada. The inflation rate has a greater impact on the policy rate for New Zealand than for Australia and Canada whereas the output gap has a greater effect on the policy rate for Australia and Canada than for New Zealand. Since the adoption of inflation targeting, the intercept of the monetary-policy function has decreased in each of the three countries, and the slope coefficient of the inflation rate has increased for Australia and New Zealand but has decreased for Canada.

scholarly journals Die Bedeutung monetärer Größen für die deutsche Wachstumsschwäche 1995–2005

2009 ◽  
Vol 60 (1) ◽  
Author(s):  
Jonas Dovern ◽  
Nils Jannsen ◽  
Joachim Scheide
Keyword(s):  
Economic Growth ◽  
Growth Rate ◽  
Monetary Policy ◽  
Exchange Rate ◽  
Euro Area ◽  
German Economy ◽  
Real Effective Exchange Rate ◽  
Effective Exchange ◽  
Weak Growth ◽  
Effective Exchange Rate

SummaryBetween 1995 and 2005, the German economy has experienced a phase of weak economic growth. We analyze whether this weak growth performance can be attributed to the stance of monetary conditions during that period. We show that the real effective exchange rate did have almost no dampening effects on growth. On the contrary, the introduction of the euro and the single monetary policy for the euro area seem to have contributed significantly to the low trend growth rate in Germany between 1999 and 2005.

scholarly journals The cyclical character of economic policy in Serbia 2001-2012

2014 ◽  
Vol 59 (202) ◽  
pp. 157-182 ◽  
Author(s):  
Jelena Radovic-Stojanovic
Keyword(s):  
Monetary Policy ◽  
Economic Policy ◽  
Exchange Rate ◽  
Money Supply ◽  
Cross Correlation ◽  
Price Index ◽  
Real Effective Exchange Rate ◽  
The Real ◽  
Effective Exchange ◽  
Effective Exchange Rate

This paper investigates the cyclical character of economic policy in Serbia in the period 2001-2012. For this purpose the cyclical movement of the following monetary and fiscal variables have been analysed: M2 money supply, the retail price index, the consumer price index, and the real effective exchange rate as the monetary policy indicators, and budget revenues and budget expenditures as the fiscal policy indicators. In the evaluation of the cyclical character of the economic policy, cross-correlation between the cyclical component of economic policy indicators and the gross domestic product at various lags has been observed. The results of cross-correlation analysis suggest that the budget expenditures are countercyclical and lead the aggregate cycle while the budget revenues are procyclical. The cyclical character of M2 money supply in the Serbian economy is somewhat contradictory, so further investigations of the cyclical character of monetary policy and mutual interdependence of money and output are required. The real effective exchange rate is countercyclical. The prices are procyclical and lag behind the cycles in aggregate economic activity. The procyclical character of prices indicates that the causes of the cyclical fluctuations of aggregate economic activities in Serbia in the period from 2001 to 2012 were on the demand side.

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