scholarly journals The exchange rate in Orthodox, Keynesian and New Developmentalism theoretical models: a literature review

2021 ◽  
Vol 41 (2) ◽  
pp. 220-235
Author(s):  
WILLIAM CAPRIATA ◽  
LEONARDO FLAUZINO DE SOUZA
Keyword(s):  
Exchange Rate ◽  
Literature Review ◽  
Exchange Rates ◽  
Theoretical Models ◽  
Balance Of Payments ◽  
Exchange Rate Determination ◽  
Macroeconomic Models ◽  
The Exchange Rate

ABSTRACT The main purpose of this paper is to present the differences in the exchange rates in macroeconomic models from the three current theoretical views: Orthodox, Post-Keynesian and New Developmentalism. To achieve this objective, it is proposed to make a bibliographic survey of the literature on open macroeconomics and exchange rate. The main differences among these views concerns to exchange rate determination, causes of exchange rate variations and balance of payments equilibrium determination.

scholarly journals Exchange rate determination and the flaws of mainstream monetary theory

2018 ◽  
Vol 38 (1) ◽  
pp. 99-114
Author(s):  
HEINER FLASSBECK
Keyword(s):  
Developing Countries ◽  
Exchange Rate ◽  
Financial Markets ◽  
Exchange Rates ◽  
Monetary Theory ◽  
International Financial Markets ◽  
External Shocks ◽  
Exchange Rate Determination ◽  
Equilibrium Level ◽  
The Exchange Rate

ABSTRACT Developing countries in general need flexibility and a sufficient number of instruments to prevent excessive volatility. Evidence does not support the orthodox belief that, with free floating, international financial markets will perform that role by smoothly adjusting exchange rates to their “equilibrium” level. In reality, exchange rates under a floating regime have proved to be highly unstable, leading to long spells of misalignment. The experience with hard pegs has not been satisfactory either: the exchange rate could not be corrected in cases of external shocks or misalignment. Given this experience, “intermediate” regimes are preferable when there is instability in international financial markets.

The Exchange Rate, Interest Rates and the Current Balance ln a Forward-Looking Model

1988 ◽  
Vol 125 ◽  
pp. 40-45 ◽  
Author(s):  
Andrew Gurney
Keyword(s):  
Exchange Rate ◽  
Exchange Rates ◽  
Interest Rates ◽  
Balance Of Payments ◽  
Capital Inflows ◽  
The Other ◽  
Other Hand ◽  
The Exchange Rate ◽  
Temporary Rise ◽  
Forward Looking

In March this year, after a year in which policy appeared to be aimed at achieving stability against EMS currencies, the pound was allowed to rise sharply in response to large capital inflows. As with many fluctuations in exchange rates, this development was puzzling in that the prospects for the balance of payments suggested that the rise in sterling would not prove sustainable. On the other hand, high UK interest rates, particularly in relation to those available in EMS countries, provided some rationale for a temporary rise. This note uses a simple forward-looking equation for the exchange rate to illustrate the implications of alternative paths for interest rates and the balance of payments. A number of simulations are presented to illustrate the key elements of this approach.

scholarly journals THE IMPACT OF BALANCE OF PAYMENTS ON MONETARY POLICY

2019 ◽  
Vol 34 (5) ◽  
pp. 1337-1342
Author(s):  
Vesna Korunoska ◽  
Biljana Mitrovic ◽  
Pavle Trpeski
Keyword(s):  
Exchange Rate ◽  
Exchange Rates ◽  
Foreign Exchange ◽  
Foreign Currency ◽  
Supply And Demand ◽  
Real Exchange Rates ◽  
Balance Of Payments ◽  
Adjustment Process ◽  
The Exchange Rate ◽  
The Impact

The paper monitors the balance of payments in the Republic of N. Macedonia, which determines the amount of the exchange rate through the supply and demand of foreign currency, as well as the impact of the exchange rate on the balance of payments movements. Real exchange rates are essentially equilibrium exchange rates. exchange rate that will keep the balance of payments in balance without taking measures for foreign exchange control, without pronounced inflation and deflationary tendencies and without constant expectation of monetary and foreign exchange reserves.There are several methods by which balance of payments can be established: by devaluation, by currency control and by deflation. When considering the relationship between the national currency exchange rate and the balance of payments of a national economy in terms of their interconnections, one should depart from their causal link of impacts. The exchange rate affects the balance of payments, as well as the balance of payments affects the exchange rate.The first part of the paper elaborates in detail the key activities of the balance of payments adjustment and the exchange rate adjustment, as well as their mutual impact.We use the adjustment mechanism to restore balance once the initial equilibrium has been disturbed. The payment adjustment process takes two different forms. One, under certain conditions, has adjustment factors that automatically contribute to balancing. Second, in the event that automatic adjustment fails to strike a balance, the government adopts a discretionary policy to achieve this goal.

scholarly journals The Role of Exchange Rates in the Stock Price Development of Chemical Companies in the Visegrad Four Countries

2019 ◽  
Vol 22 (3) ◽  
pp. 117-129
Author(s):  
Jana Šimáková ◽  
Nikola Rusková
Keyword(s):  
Exchange Rate ◽  
Pharmaceutical Industry ◽  
Exchange Rates ◽  
Stock Prices ◽  
Stock Price ◽  
Stock Exchanges ◽  
The Exchange Rate ◽  
Chemical Companies ◽  
The Empirical Analysis

The aim of the paper is to evaluate the effect of exchange rates on the stock prices of companies in the chemical industry listed on the stock exchanges in the Visegrad Four countries. The empirical analysis was performed from September 2003 to June 2016 on companies from the petrochemical and pharmaceutical industry. The effect of the exchange rate on stock prices is analyzed using Jorion’s approach on monthly data. In contrast to the selected petrochemical companies, the pharmaceutical companies did not use any hedging instruments in the tested period. The effect of the exchange rate on the stock price was proved only in the case of companies from the pharmaceutical industry. This suggests that exchange rate risk could be eliminated by using hedging instruments.

scholarly journals Modeling Sources of Asymmetry in the Volatility of the Moroccan Dirham Exchange Rate

2021 ◽  
Vol 8 (4) ◽  
pp. 31
Author(s):  
KHATTAB Ahmed ◽  
SALMI Yahya
Keyword(s):  
Exchange Rate ◽  
Central Bank ◽  
Exchange Rates ◽  
Foreign Exchange ◽  
Selection Criterion ◽  
Econometric Models ◽  
Interbank Market ◽  
Foreign Exchange Reserves ◽  
Central Bank Intervention ◽  
The Exchange Rate

The main objective of this paper is to study the sources of asymmetry in the volatility of the bilateral exchange rates of the Moroccan dirham (MAD), against the EUR and the USD using the asymmetric econometric models of the ARCH-GARCH family. An empirical analysis was conducted on daily central bank data from March 2003 to March 2021, with a sample size of 4575 observations. Central bank intervention in the foreign exchange (interbank) market was found to affect the asymmetry in the volatility of the bilateral EUR/MAD and USD/MAD exchange rates. Specifically, sales of foreign exchange reserves by the monetary authority cause a fall in the exchange rate, which means that the market response to shocks is asymmetric. Finally, the selection criterion (AIC) allowed us to conclude that the asymmetric model AR(1)-TGARCH(1,1) is adequate for modeling the volatility of the exchange rate of the Moroccan dirham.

scholarly journals Measuring the relationship between the balance of payments and the exchange rate - A case study of a group of Arab countries during the period 2000/2016-

2018 ◽  
Vol 2 (2) ◽  
pp. 44-66
Author(s):  
Abd Elouahid SERARMA ◽  
Newfel BAALOUL
Keyword(s):  
Exchange Rate ◽  
Empirical Studies ◽  
Arab Countries ◽  
Balance Of Payments ◽  
Rate System ◽  
Exchange Rate System ◽  
Independent Variable ◽  
The Exchange Rate ◽  
The Relationship

The Objective of this study is to examine the effect of exchange rate system on the balance of payments, with a case study of a group of Arab countries. First we shed light on the most important theoretical and empirical studies of exchange rate systems and their macroeconomics effects in one hand. In the other hand we study a case of six oil exporting Arab countries. To achieve this purpose we adopted a panel data and run an econometric model to examine the relationships between the variables during the period 2000 to 2016. The study concluded that there is a significant positive correlation between the exchange rate as an independent variable and the balance of payments as a dependent variable, and there is no deference in the effects of the exchange system in the study of six Arab economies.

scholarly journals Application of Generalized Space Time Autoregressive Model on Farmer Exchange Rate Data in Three Provinces of The Sumatera Island

2020 ◽  
Vol 21 (2) ◽  
pp. 97
Author(s):  
Fadhilatul Nida Aryani ◽  
Sri Sulistijowati Handajani ◽  
Etik Zukhronah
Keyword(s):  
Exchange Rate ◽  
Exchange Rates ◽  
Agricultural Sector ◽  
Space Time ◽  
Rate Data ◽  
Previous Time ◽  
West Sumatra ◽  
Cross Correlations ◽  
The Exchange Rate ◽  
Inverse Distance

The agricultural sector has a big role in the development of the Gross Regional Domestic Product (GDP). Therefore the agricultural sector is very important. Besides the agricultural sector, the farmer's welfare also needs to be considered because the agricultural sector will be good if the welfare of farmers is good also. In measuring the level of farmers' welfare, the method used is the farmer's exchange rate. The farmer's exchange rate has a location relationship and a previous time relationship. The Generalized Space-Time Autoregressive (GSTAR) model is a good method of forecasting data that contains time series and location relationships by assuming that the data has heterogeneous characteristics. The purpose of this study is to model the farmer exchange rate data with GSTAR using normalization of cross-correlations weighting and inverse distance in three provinces namely West Sumatra, Bengkulu and Jambi Provinces. Based on data analysis, the best GSTAR model obtained by using the best weighting with the model is GSTAR (11) − I(1) using normalization of cross-correlations because the assumption of normal white noise and multivariate are fulfilled with an RMSE value of 1.097775. The best GSTAR model explains that the exchange rate of West Sumatra farmers is only the previous time, Bengkulu farmers' exchange rate is the previous time and is the exchange rates of farmers of West Sumatra and Jambi, whereas for the exchange rate of farmers of Jambi is the exchange rates of farmers of Bengkulu and West Sumatra and influenced by previous times.Keywords: GSTAR, RMSE, farmers exchange rate, normalization of cross-correlations, inverse distance.

scholarly journals The Impact of Russia’s Oil-Dominated Energy Economic Changes on the Exchange Rate of Russian Ruble – Chinese Renminbi

2017 ◽  
Vol 13 (22) ◽  
pp. 173
Author(s):  
Maoguo Wu ◽  
Yue Yu
Keyword(s):  
Economic Development ◽  
Exchange Rate ◽  
Exchange Rates ◽  
Explanatory Power ◽  
Close Relation ◽  
Policy Implications ◽  
The Exchange Rate ◽  
Exchange Rate Changes ◽  
Pillar Industry ◽  
The Impact

Russia’s economic development has a close relation with China, due to geographical and historical reasons. This paper investigates whether the ruble – renminbi exchange rate changes accordingly when the pillar industry of Russia is drastically changing, and how the exchange rate changes and how it affects Russia’s economic development. In this paper, data of 7 variables spanning 122 months are selected based on related literature and availability of data. Regression analysis and empirical tests are carried out consequently. The results show that the energy price index represented by oil prices is negatively correlated with the exchange rate, and the explanatory power is as high as 41.1%. Following basic arbitrage methods and strategies, this paper verifies the feasibility of using arbitrage by comparing actual exchange rates with forecasted exchange rates. According to empirical results, problems witnessed in the process of ruble internationalization provides policy implications for China. China’s economy is utilized as an example to discuss the shortcomings of Russia’s economy. Related solutions are proposed.

scholarly journals Remittances and exchange rate - Empirical evidence from emerging economies

2016 ◽  
Vol 19 (1) ◽  
pp. 39-51
Author(s):  
Canh Phuc Nguyen
Keyword(s):  
Exchange Rate ◽  
Panel Data ◽  
Emerging Markets ◽  
Interest Rates ◽  
Emerging Economies ◽  
Global Financial Crisis ◽  
Balance Of Payments ◽  
The Exchange Rate ◽  
Remittance Flows ◽  
Macroeconomic Risks

The exchange rate plays an important role to trade, investment and macroeconomic risks of open economies. There are many factors that affect the exchange rate such as inflation, interest rates, balance of payments where remittance flows receive more and more attention of economists due to their increase in their values, particularly in emerging economies. This study uses data from 21 countries which are classified as emerging markets in the period between 2001 and 2013 to investigate the impacts of remittances on exchange rate. Through panel data estimations, we found that remittances increase the value of the local currencies, which is not altered by the 2008 global financial crisis.

scholarly journals The Stock Market and Exchange Rates in Five South Asian Countries

2017 ◽  
Vol 18 (1) ◽  
pp. 102 ◽  
Author(s):  
Firmansyah Firmansyah ◽  
Shanty Oktavilia
Keyword(s):  
Exchange Rate ◽  
Financial Crisis ◽  
Stock Market ◽  
Exchange Rates ◽  
Stock Returns ◽  
Stock Prices ◽  
Stock Return ◽  
The Philippines ◽  
Short Run ◽  
The Exchange Rate

The composite price index and return of stocks are the important indicators, both as a measure of the company's portfolio performance, as well as an indicator of macroeconomic health and the aggregate investment. In addition, the stock prices are also influenced by macroeconomic variables and one of the most important is the exchange rates. The objective of this study is to determine the behavior of exchange rate affects the stock returns in Southeast Asia, pre and post of the 2008 world financial crisis. By employing the daily stock market return in Indonesia, Malaysia, the Philippines, Thailand, and Singapore more than seventeen years from 1 September 1999 to 31 March 2017, this study utilizes Engle-Granger error correction model and cointegration approach to investigate and compare the long and short run of the structural effect of the exchange rates on stock returns. To differentiate the behavior of variables between pre and post occurrence of 2008 world financial crisis, the estimation of the model is divided into two periods. This study finds that the exchange rate growth influence the stock returns in the long and short run, and proves that the cointegration between the two variables exist in all countries. The study has the implication that the exchange rate, which the one of the fundamental measures of a country's macroeconomic health, is an important determinant of influencing stock return, even its effects are responded by the stock return in one day.

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