Influence of exchange rate on cross-border shopping of Bruneians in Malaysia

The article is devoted to the «Trilemma» of the policy of the monetary authorities, or the «rule of impossible trinity». This policy compatibility rule, formulated more than 50 years ago, remains relevant today. Its reliability is generally confirmed by a number of empirical studies, although there are also suggestions on the need to adjust this economic and theoretical development. The corresponding discussion also affects the policy of the Bank of Russia (mega-regulator), which carries out inflation targeting in conditions of the free movement of cross-border capital and the use of a floating ruble exchange rate. Regarding the effectiveness of this policy, carried out in the presence of increased sensitivity of the Russian economy to external shocks, the authors express certain doubts.

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Cross-border merger and acquisition activities in Asia: the role of macroeconomic factors

Studies in Economics and Finance ◽

10.1108/sef-06-2017-0146 ◽

2018 ◽

Vol 35 (2) ◽

pp. 307-329 ◽

Cited By ~ 3

Author(s):

Yusnidah Ibrahim ◽

Jimoh Olajide Raji

Keyword(s):

Exchange Rate ◽

Interest Rate ◽

Money Supply ◽

Inflation Rate ◽

Merger And Acquisition ◽

The Philippines ◽

Macroeconomic Factors ◽

Content Type ◽

Cross Border ◽

Asean Countries

Purpose This paper aims to examine the influence of key macroeconomic factors on the inward and outward acquisition activities of six ASEAN (ASEAN: Association of Southeast Asian Nations) countries, namely, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam, over the 1996-2015 period. Design/methodology/approach The study uses alternative panel data methods, including pooled mean group, mean group and dynamic fixed-effect estimators. Findings The results indicate that gross domestic product (GDP), interest rate, exchange rate, money supply and inflation rate are the most important macroeconomic factors explaining the trends of cross-border mergers and acquisition outflows of the ASEAN-6 countries. Specifically, GDP, money supply and inflation rate have significant positive relationships with acquisition outflows, while interest rate and exchange rate exert significant negative influence. On the other hand, the authors find four significant macroeconomic factors explaining the trends of the inward acquisitions. Essentially, GDP, money supply and inflation rate have significant positive impacts on inward acquisitions, while the impact of exchange rate is negatively significant. Research limitations/implications Unavailability of data limits this study to pool six sample countries from ASEAN, instead of ten representative member countries. Practical implications The results of this study can signal to firms or investors, involving in cross-border mergers and acquisitions, where to direct foreign resources flows. Moreover, having the knowledge about the relative levels of market size and other macroeconomic factors in both home and host countries can be of great importance for investment decision. Therefore, policymakers of ASEAN countries should make appropriate macroeconomic policies that can stimulate inward and outward acquisitions. Originality/value The main contribution of this paper is that it is the first to present the analysis of macroeconomic influences on the trends of inward and outward merger and acquisition activities in six ASEAN countries.

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Conclusions

Currency Politics ◽

10.23943/princeton/9780691173849.003.0008 ◽

2016 ◽

Author(s):

Jeffry A. Frieden

Keyword(s):

Exchange Rate ◽

Exchange Rates ◽

Exchange Rate Policy ◽

Theoretical Argument ◽

Economic Agents ◽

Cross Border ◽

Domestic Prices ◽

Pass Through ◽

Exchange Rate Pass Through ◽

Export Competition

This chapter summarizes key findings. This book makes a simple theoretical argument about the distributional implications of exchange rate policy. It suggests that economic actors with important cross-border interests, exposed to currency volatility, will tend to prefer more stable and predictable exchange rates. It also claims that tradables producers will, all else being equal, tend to prefer a depreciated real exchange rate. These concerns will be tempered by the extent of exchange rate pass-through—that is, the degree to which currency movements affect domestic prices. The analysis in this book shows that countries whose economic agents are more involved in cross-border trade are more likely to fix their exchange rates in order to reduce currency volatility. Countries with large groups susceptible to import or export competition—import-competing manufacturers and export farmers—are more likely to choose flexible exchange rates that allow currency depreciations. Governments facing an election encourage or allow currency appreciation that increases the purchasing power of consumers.

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Asymmetric Exchange Rate Effects on Cross-Border Freight Flows between the United States and Canada

Transportation Research Record Journal of the Transportation Research Board ◽

10.1177/0361198120912242 ◽

2020 ◽

Vol 2674 (4) ◽

pp. 348-361

Author(s):

Junwook Chi

Keyword(s):

Exchange Rate ◽

Linear Models ◽

Bilateral Trade ◽

Nonlinear Models ◽

Exchange Rate Volatility ◽

The United States ◽

Trade Flows ◽

Asymmetric Effects ◽

Cross Border ◽

Long Run

This paper investigates possible asymmetric influences of the exchange rate on cross-border freight flows between the U.S.A. and Canada. Linear and nonlinear autoregressive distributed lag models are used to test for the existence of long-run asymmetric effects of 1) currency appreciation and depreciation and 2) exchange rate volatility changes on trade flows by truck, rail, air, vessel, and pipeline. This paper provides evidence that both currency value and exchange rate volatility affect the U.S.–Canada freight flows in an asymmetric manner. The long-run results of the nonlinear models show that exchange rate is found to be significantly associated with the bilateral trade flows between the U.S.A. and Canada. Exchange rate volatility tends to be significantly associated with trade flows in the nonlinear models, while its effects are insignificant in most cases in the linear models. These findings suggest that the conventional linear specification may mislead the asymmetric effects of exchange rate uncertainty on cross-border freight flows. It is also found that exchange rate sensitivities of U.S.–Canada trade flows by transport mode can differ significantly from those of aggregate trade flows. The information derived from disaggregate trade data can be useful for traders and shippers to develop a long-term strategic plan for infrastructure investment and service expansion.

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What Drives Stops in Cross-Border Bond Flows?

Sustainability ◽

10.3390/su11143763 ◽

2019 ◽

Vol 11 (14) ◽

pp. 3763

Author(s):

Seung-Gwan Baek ◽

Chi-Young Song

Keyword(s):

Exchange Rate ◽

Financial Markets ◽

Emerging Economies ◽

Exchange Rate Regimes ◽

Real Exchange Rates ◽

Flexible Exchange Rate ◽

Regression Method ◽

Policy Implications ◽

Capital Account ◽

Cross Border

This paper empirically explores the determinants of stop episodes driven by bond flows using quarterly data from 38 economies over the period 1995–2011. Drastic bond-led stop episodes may greatly destabilize domestic financial markets and lead to financial crisis, threatening the sustainability of the financial system. Using the complementary log–log regression method, we found that bond-led stop episodes were associated with contagion and domestic factors rather than global factors. The results of our estimation showed that the probability of bond-led stop episodes was higher in countries with larger financial markets or with more overvalued real exchange rates. The main policy implications of our results, particularly for emerging economies, are that bond-led stop episodes were less likely to occur in countries with higher levels of institutional quality, lower capital account restrictions, or more flexible exchange-rate regimes. Finally, we found that capital control played a relatively greater role in predicting bond-led stops in emerging economies than did exchange-rate regimes.

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Toward the Modeling of Russia's Monetary System

10.20944/preprints202003.0086.v1 ◽

2020 ◽

Author(s):

S.M. Borodachev

Keyword(s):

Exchange Rate ◽

Commercial Banks ◽

Foreign Currency ◽

Cross Border ◽

Monetary System ◽

The Creation

The paper gives an explanation of the dynamics of the money masses in Russia through cross-border flows of rubles and (foreign) currency and the creation of deposits by commercial banks. Volumes of flows and deposits in turn depend on changes in the currency/ruble exchange rate. It was found that the growth/fall of the USD rate by 1 RUB for the month, for the same month decreases/increases: currency outflow abroad by $0.111 billion and creation of ruble deposits and the inflow of rubles from outside by $0.133 billion.

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Toward the Modeling of Russia's Monetary System

10.20944/preprints202003.0086.v2 ◽

2021 ◽

Author(s):

S.M. Borodachev

Keyword(s):

Exchange Rate ◽

Commercial Banks ◽

Trade Balance ◽

Foreign Currency ◽

Economic Conditions ◽

Currency Reserve ◽

Cross Border ◽

Monetary System ◽

Money Flows ◽

The Creation

The paper explains the dynamics of monetary aggregates in Russia with the help of country's trade balance, the creation of deposits by commercial banks and cross-border flows of rubles and (foreign) currency. The volumes of deposits and flows, in turn, depend on changes the currency/ruble exchange rate and favorable external economic conditions. The model was estimated by the Kalman filter, the adequacy was confirmed by stimulation. Monthly money supply forecasts have an accuracy of ~ 1%. It was found that the volume of additional deposits created per month is ~ 300 billion RUB (this leads to real inflation of 9.5% per annum), money flows that are not related to payments for goods: rubles inflow from abroad ~ 100 billion RUB, currency goes abroad ~ $ 15 billion. With the growth / fall of the dollar exchange rate by 1 RUB per month, during the same month, the creation of additional ruble deposits and the arrival of rubles from outside decreases / increases by $ 0.114 billion. The increase of the Currency Reserve Assets of Russia is accompanied by going abroad ~ 5% of the increase.

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Corporation Tax, the Exchange Rate, and Cross-Border Firm Mobility

Journal of International Commerce Economics and Policy ◽

10.1142/s1793993321500150 ◽

2021 ◽

Author(s):

Wataru Johdo

Keyword(s):

Exchange Rate ◽

Open Economy ◽

Corporate Tax ◽

Economy Model ◽

Tax Rate ◽

Corporation Tax ◽

New Open Economy Macroeconomics ◽

Cross Border ◽

Tax Reduction ◽

Foreign Countries

In this paper, we extend a new open economy macroeconomics (NOEM) model to examine the effects of a corporate tax reduction on home and foreign countries. The feature of this open economy model is that cross-border relocation of firms is allowed. We show that (i) a reduction in the home corporate tax rate induces an exchange rate appreciation (depreciation) when the degree of cross-border firm mobility is large (small) and (ii) when the degree of cross-border firm mobility is large (small), a reduction in corporate tax is beneficial (detrimental) to the domestic country but detrimental (beneficial) to the foreign country.

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