scholarly journals A Monetary Examination Of Swedish Balance Of Payments Adjustment

2011 ◽  
Vol 4 (3) ◽  
pp. 31
Author(s):  
Richard W. Kjetsaa
Keyword(s):  
Open Economy ◽  
Balance Of Payments ◽  
Exchange Market ◽  
Alternative Analysis ◽  
Exchange Market Pressure ◽  
Monetary Approach ◽  
Market Pressure

The monetary approach to the balance of payments presents an alternative analysis of international imbalance one that highlights and brings to the forefront the role of monetary variables. This open economy macrofinancial theory postulates that external disorders reflect disequilibrium between the demand for and supply of money. The balance of payments is a monetary phenomenon. In this paper both the reserve-flow and exchange market pressure formulations are examined.

SOME EMPIRICAL EVIDENCE OF EXCHANGE MARKET PRESSURE IN SINGAPORE

2004 ◽  
Vol 49 (01) ◽  
pp. 55-69 ◽  
Author(s):  
HIROYA AKIBA ◽  
YUKIHIRO IIDA
Keyword(s):  
Open Economy ◽  
Foreign Exchange Market ◽  
Small Open Economy ◽  
Exchange Market ◽  
Specific Interest ◽  
Exchange Market Pressure ◽  
Quarterly Data ◽  
Intervention Activity ◽  
Market Intervention ◽  
Market Pressure

This paper examines an intervention index in the foreign exchange market, applying the quarterly data of the Singapore economy during the 1990's. The intervention index measures intervention activity as the proportion of exchange market pressure relieved by exchange market intervention. Singapore is selected because (1) it is a small open economy and consistent with this empirical study, and (2) it has been affected by speculative attacks. The specific interest is the effectiveness of intervention conducted by the Singapore authority to mitigate exchange market pressure. It is concluded that the overall intervention activity is surprisingly successful over the sample period.

scholarly journals Measuring exchange market pressure in South Africa: an application of the Girton-Roper monetary model

2013 ◽  
Vol 10 (1) ◽  
pp. 89-98 ◽  
Author(s):  
Emmanuel Ziramba
Keyword(s):  
Exchange Rate ◽  
Real Income ◽  
Flexible Exchange Rate ◽  
Exchange Market ◽  
Monetary Model ◽  
Exchange Market Pressure ◽  
African Experience ◽  
Monetary Approach ◽  
The Impact ◽  
Market Pressure

The monetary approach to the balance of payments is based on the assumption of a fixed exchange rate, while its approach to exchange rate determination is based on perfectly flexible exchange rate. Another monetary model called the Exchange Market Pressure model (EMP) was designed to capture the properties of the managed float. This paper applies the monetary model of the EMP to the South African experience with floating exchange rate and managed float systems over the period 1970-1993. We show that the EMP model is superior to the traditional monetary approach. We do not find evidence of the impact of domestic real income on EMP. Diagnostic tests suggest that the model is well specified and the residuals pass the typical checking.

scholarly journals Instrument of Managing Exchange Market Pressure: Money Supply or Interest Rate

2007 ◽  
Vol 46 (4II) ◽  
pp. 381-394
Author(s):  
M. Idrees Khawaja ◽  
Musleh-Ud Din
Keyword(s):  
Exchange Rate ◽  
Central Bank ◽  
Foreign Currency ◽  
Exchange Market ◽  
Foreign Reserves ◽  
Exchange Market Pressure ◽  
Monetary Approach ◽  
Market Pressure ◽  
External Account ◽  
Exchange Rate Depreciation

Exchange market pressure (emp) reflects disequilibrium in money market. The traditional approaches used to examine the disequilibrium in money market include the monetary approach to balance of payments and monetary approach to exchange rate. Under the former approach the variation in foreign reserves helps restore the equilibrium while under the latter one the change in exchange rate does the needful.1 The idea of this study stems from the fact that under the managed float exchange rate regime, changes in foreign reserves or changes in exchange rate in isolation are not a sufficient guide to characterise the external account situation of an economy. For example, exchange rate depreciation can be partially avoided or at least delayed if the central bank injects foreign currency in the forex market by letting its foreign reserves deplete. Alternatively, central bank can build up foreign reserves by purchasing foreign currency from the market against domestic currency. Such intervention would curb the exchange rate appreciation demanded by fundamentals. Therefore, focus on either of the two, that is, movement in exchange rate or variation in foreign reserves, to the complete exclusion of the other, is bound to portray a misleading picture of the external account situation. Given the foregoing a composite variable, that incorporates changes in exchange rate as well as variation in foreign reserves, over a certain period, is needed to characterise the condition of external account. The requisite composite variable has been developed by Girton and Roper (1977) as ‘simple sum of exchange rate depreciation and variation in foreign reserves scaled by monetary base’. They refer to it as exchange market pressure (emp).

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