Vehicle Currency Pricing and Exchange Rate Pass-Through

Using detailed firm-level transactions data for UK imports, we find that invoicing in a vehicle currency is pervasive, with more than half of the transactions in our sample invoiced in neither sterling nor the exporter’s currency. We then study the relationship between invoicing currencies and the response of import unit values to exchange rate changes. We find that for transactions invoiced in a vehicle currency, import unit values are much more sensitive to changes in the vehicle currency than in the bilateral exchange rate. Pass-through therefore substantially increases once we account for vehicle currencies. This result helps to explain why UK inflation turned out higher than expected when sterling depreciated during the Great Recession and after the Brexit referendum. Finally, within a conceptual framework we show why bilateral exchange rates are not suitable for capturing exchange rate pass-through under vehicle currency pricing. Overall, our results help to clarify why the literature often finds a disconnect between exchange rates and prices when vehicle currencies are not accounted for.

Theatrical Exchanges across the Baltic Sea in the 1930s

This article explores theatrical exchanges across the Baltic Sea in the 1930s as part of the cultural diplomacy of recently independent Finland. The Finnish National Theatre visited the Estonia Theatre in Tallinn in 1931 and in 1937, and the Royal Dramatic Theatre in Stockholm in 1936. These theatre visits were different in terms of the visiting production. In Stockholm in 1936, and in Tallinn in 1937, the Finnish National Theatre showcased its work, while during the bilateral exchange with the Estonia Theatre in 1931, the main actors of two of the productions visited the other theatre and the audiences saw two hybrid performances of the two productions. Therefore, the visits are discussed in terms of international and transnational exchange.

Theatre Against Stagnation

This article explores theatrical exchanges across the Baltic Sea in the 1930s as part of the cultural diplomacy of recently independent Finland. The Finnish National Theatre visited the Estonia Theatre in Tallinn in 1931 and in 1937, and the Royal Dramatic Theatre in Stockholm in 1936. These theatre visits were different in terms of the visiting production. In Stockholm in 1936, and in Tallinn in 1937, the Finnish National Theatre showcased its work, while during the bilateral exchange with the Estonia Theatre in 1931, the main actors of two of the productions visited the other theatre and the audiences saw two hybrid performances of the two productions. Therefore, the visits are discussed in terms of international and transnational exchange.

Volcker Rule in Practice

Established as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Volcker Rule’s restriction of banks and financial companies from participating in proprietary trading was conceived of as a response to the systemic institutional failures that are commonly noted to be partially responsible for the financial crisis of 2008. Over its short and contentious lifetime, the Rule has been widely praised by some as a necessary step toward limiting unsustainably risky corporate investment practices, and widely vilified by others as being poorly drafted, impracticably restrictive, and only tenuously connected to the crisis precipitating its enactment. The conspicuous disunity among participants in this discussion reflects, in part, the difficulty of measuring the direct impact that the Volcker Rule has had since its enactment, particularly given the complexity of the investment activities the Rule attempts to regulate and the dearth of conclusive statistics indicating which phenomena are accurately attributable to the Rule’s interference. Through a survey and analysis of the public’s input and assessment of the Volcker Rule and its more recent development, this Note explores how administrative processes have fared in giving an adequate voice to the various viewpoints of affected private citizens, businesses, and public entities. Ultimately, this Note argues that the Volcker Rule’s surprisingly modest evolution to date is overshadowed by charged rhetoric, vast information gaps, and unbalanced regulatory feedback rather than substantive bilateral exchange—a phenomenon frustratingly typical of the democratic processes in the context of complex financial reform. This Note concludes by offering reflections on the Volcker Rule’s evolution to date and what the data examined has to say about the successes and shortcomings of the lawmaking processes driving that evolution forward.

Does Economic Integration Affect the Co-movement between Financial Markets? Evidence from Pakistani equity market with its global partners

The study investigates the impact of bilateral trade, economic fundamentals and financial crisis on the equity market integration (EMI) of Pakistan’s equity market with its major global trading partners (China, India, USA and UK) for the period 1998 to 2016. The findings of the study indicate that bilateral trade and economic conditions have a significant impact on EMI, the export dependence of two economies may increase the EMI and import dependence reduces the EMI of two economies. Moreover, inflation differential and volatility in the bilateral exchange rate have a negative impact on EMI. It implies that inflation rates in Pakistan’s equity market are higher as compare to other markets and volatility in bilateral exchange rate may reduce trade flows and its tendency to follow other market (Bracker, Docking , & Koch, 1999). Furthermore, the financial crisis in an economy may reduce the EMI with its trading partners and EMI between different markets is affected by their bilateral economic fundamentals. The results imply that financial integration between different markets is affected by their bilateral economic fundamentals. The study has strong implications for international investors who need to assess risks and benefits associated with international portfolio diversification.

Exchange Rate Volatility and Trade: External Exchange Rate Volatility Matters

We investigate the role of external exchange rate volatility in export in addition to the effect of bilateral exchange rate volatility using country-, sector-, and destination-specific detailed export data of the World Bank Exporter Dynamics Database. The results show that while the bilateral exchange rate volatility has a depressing effect on export, the external exchange rate volatility generates trade-promoting effect on export. However, the magnitude of the effect depends on trade intensity between countries. Furthermore, while the role of external exchange rate volatility diminished after the Global Financial Crisis, the effect of its volatility has become larger. Finally, external exchange rate volatility has a larger trade-promoting effect on export in the presence of high volatilities than the effect in the presence of low volatilities.