The impact of market regulations on intra-European real exchange rates

We study the contribution of market regulations to the dynamics of the real exchange rate within the European Union. Based on a model proposed by De Gregorio et al. (Rev Int Econ 2(3):284–305, 1994a), we show that both product market regulations in nontradable sectors and employment protection tend to raise the real exchange rate. We then carry out an econometric estimation for European countries for 1985–2006 to quantify the contributions of the pure Balassa–Samuelson effect and those of market regulations on real exchange-rate variations. Based on this evidence and on a counter-factual experiment, we conclude that the relative evolutions of product market regulations and employment protection across countries play a very significant role for real exchange-rate variations within the European Union and especially within the euro area, through their impacts on the relative price of nontradable goods.     

Keynes on inflation and exchange rates

Atlantic Economic Journal -     

The impact of big-time athletics on graduation rates

Conclusions Using the same universities with high-quality sports programs studied by McCormick and Tinsley, this paper qualifies their conclusion that big-time football enhances the academic mission through an advertising effect. While the advertising effect of an established big-time football winning tradition may attract a higher quality student to a university, there is a cost for some students once they enroll. Consistent with the adverse effect on output of faculty publications found in the Shughart, Tollison, and Goff study, this paper offers evidence that athletic success comes at the expense of some students who fail to graduate. Faced with the decision to study or engage in entertainment, the opportunity cost to students is higher when their football program is successful. If the football team is nationally ranked, there is greater incentive to talk football in the dorm, attend home games, cut Friday classes to take road trips to away games, including bowl games, and in general put off studying. In contrast, the evidence suggests that a big-time basketball program is unrelated to the graduation rate.     

The impact of shocks to exchange rates and oil prices on U.S. sales of American and Japanese automakers

Since 1973, floating exchange rates and significant oil-price changes have coincided with dramatic market-share gains (losses) by Japanese (American) automakers in the U.S. market. This paper analyzes and empirically estimates the extent to which exchange rate and oil price changes have contributed to this market shift. We first develop a dynamic Cournot model of long-run profit-maximizing firms that operate in a macroeconomy characterized by shocks to income, exchanges rates, oil prices, and firm-specific demands and supplies. Using the solutions for quantities sold from this model, we then construct a structural vector autoregression (VAR) to estimate and identify a reduced-form VAR. The empirical results indicate that a strong yen increases quantities sold by American automakers and decreases quantities sold by Japanese automakers; this exchange-rate effect accounts for approximately four percent of the variance of changes in monthly-sales quantity for automakers. Oil-price increases reduce the quantity of automobiles sold by American automakers, but, contrary to the common belief, have little effect on Japanese automakers; this oil-price effect accounts for 6.5 percent of the variance of changes in monthly-sales quantities for American automakers. Over the two decades we analyze, however, the real value of the dollar has almost steadily declined against the yen, and the real price of oil has ended up unchanged, so these variables cannot explain the decline (rise) of American (Japanese) automakers. Clearly, automobile sales are exposed to exchange rate, oil price, and income risk; between 10 and 20 percent of the changes in monthly-sales quantities can be explained by the macroeconomic variables that we analyze. However, we conclude that firm-specific policies probably account for the bulk of gains and losses actually experienced by the automakers.     

Dynamics of parallel and official exchange rates: The experience of hungary

This paper provides empirical evidence on the dynamics of dual markets in Hungary during the 1980–93 period using cointegration and error correction methodologies. The results suggest that the official and parallel markets were cointegrated. Short-run dynamics of these rates resulted from the overshooting and adjustment by the parallel rate to shocks, without any adjustment by the official rate. A devaluation had no significant impact on the parallel market premium in the long run. Although the premium declined in the short run, it was relatively small and sluggish. One lesson for the design of stabilization programs in other countries is that a devaluation is not a powerful policy tool to reduce the premium effectively.     

宏观环境对我国医药行业的影响分析

近年来,中国经济发展进入新常态,经济下行压力大、困难多,我国政府相继推出了一系列政策法规来规范我国的医药产业,医药行业的标准和壁垒不断提高,而我国医药研发水平不高、创新不足,给医药行业的发展带来了更大的考验;同时,中国人口的绝对增长、人口结构老龄化、城镇化进程加快,人民价值观转变,商业模式的颠覆式创新,消费结构和产业结构的携手升级,宏观环境的巨大变化给中国医药行业带来挑战的同时也带来了契机。本文使用PEST分析法,从"政治(politics)、经济(economy)、社会(society)、技术(technology)"四个方面,对我国医药行业所面临的宏观环境进行分析,来探究其对医药行业产生的影响。     

Interest rates, exchange rates and international adjustment: BW II dynamics

Recent attempts to explain the dynamics of adjustment of dollar exchange rates in the face of an anticipated deterioration of the US net international investment position have focused on portfolio balance models of exchange rate determination. In this paper we argue that such models are useful in understanding the behavior of dollar exchange rates with emerging market currencies but, consistent with a large body of empirical research, are not useful in understanding changes in the dollars value against the euro or the currencies of other developed countries. We conclude that portfolio preferences of governments of emerging markets provide the most plausible explanation for the persistent US current account deficit.     

The political economy of exchange rates: The case of the Japanese yen

This paper sets out a political economy model of strategic exchange rates, focusing on the importance of external pressures. In our approach, an exchange rate depreciation is shown to be analytically equivalent to an export subsidy and an import tax. Thus lobbying for exchange rate policy is akin to lobbying for trade policies. Applying our model to the recent history of the Japanese yen, we show that pressures from the US government can theoretically contribute to an appreciation of the Japanese yen. In addition, the yen will still appreciate even if we assume that the Japanese international firms are Aoki-type J-firms.     

A causal analysis of black and official exchange rates: The turkish case

Zusammenfassung Eine Kausalanalyse von Schwarzmarktkursen und offiziellen Wechselkursen: Der Fall der Türkei. - Diese Arbeit untersucht statistisch den Kausalzusammenhang zwischen Schwarzmarkt- und offiziellen Wechselkursen für das türkische Pfund, und zwar im Verh?ltnis zum US-Dollar und zur D-Mark in der Zwei-Jahres-Periode ab September {dy1985}, wobei Granger-Techniken benutzt werden. T?gliche ?nderungen des Schwarzmarktkurses für die D-Mark gehen den t?glichen ?nderungen des offiziellen Kurses voraus. Bei w?chentlichen und monatlichen ?nderungen liegt eher eine Gleichzeitigkeit vor. Die Ergebnisse für den Schwarzmarktkurs und den offiziellen Dollar-Kurs sind ?hnlich, obwohl es Hinweise für einen schwachen Feedback gibt, wenn Tagesdaten benutzt werden. Diese Befunde stützen die These, da\ Schwarzm?rkte Informationen effizient verwerten.

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Resumen Un análisis de causalidad de tipos de cambio oficial y paralelo: el caso turco. - En este trabajo se examina estadísticamente la relación causal entre los tipos de cambio paralelo y oficial de la lira turca con respecto al dólar EE.UU. y el marco alemán para un período de dos a?os, comenzando en setiembre de {dy1985} y utilizando técnicas de tipo Granger. Los movimientos diarios en el mercado paralelo del marco dan lugar a movimientos diarios en el mercado oficial. Existe una relación contemporánea en los movimientos semanales y mensuales. Los resultados para el dólar paralelo y oficial son similares, a pesar de la evidencia de una respuesta débil en el caso de utilizarse datos diarios. Los resultados apoyan la noción de que los mercados paralelos son eficientes procesadores de información.

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Résumé Une analyse de causalité pour des taux de change noirs et officiels: le cas de la Turquie. - Cet article examine statistiquement la relation causale entre les taux de change noirs et officiels pour la lira turque vis-à-vis le dollar américain et la mark allemande pour une période de deux ans qui commence en septembre 1985. L’auteur applique des techniques de type Granger. Les changements quotidiens sur le marché noir pour la mark allemande précèdent ceux sur le marché officiel. Une relation simultanée existe pour les changements hebdomadaires et mensuels. Les résultats pour le dollar noir et officiel sont similaires bienqu’il y ait quelque évidence pour une répercussion faible si les données quotidiennes sont utilisées. Les résultats supportent la notion que les marchés noirs sont des processeurs efficients des informations.

     

The effect of exchange rates on firm exports and the role of FDI

This paper studies how exchange rate movements affect the export market entry and intensity decision of firms and the export behaviour of multinationals in the UK. Using data on British manufacturing firms we find that exchange rate movements have little effect on firm export participation but have a significant impact on export shares. Multinationals have at their disposal a greater array of instruments to deal with exchange rates changes, although their use may vary according to the motives behind FDI. We also find important differences according to the country of origin of multinational firms. Multinationals firms originating from outside of the EU are less affected by changes in the exchange rate compared to those inside, who appear similarly affected as domestic firms.     

The trend behavior of real exchange rates: Evidence from OECD countries

The Trend Behavior of Real Exchange Rates: Evidence from OECD Countries. — This paper examines the validity of purchasing power parity (PPP) under the current float using real effective exchange rates of eleven OECD countries. The author employs a test which allows for a one-time change in the intercept and/or in the slope of the trend function. The timing of the structural break is treated as unknown and is endogenously searched from the data. It is found that for a vast majority of countries, the real exchange rate can be characterized as a stationary process with a broken trend. The paper provides support for PPP in the long run.     

Efficiency,predictability and news on the foreign exchange markets: Floating exchange rates versus adjustable E.M.S. rates

Zusammenfassung Effizienz, Vorhersehbarkeit und neue Informationen auf den Devisenm?rkten: Floatende Wechselkurse versus anpassungsf?hige EWS-Kurse. - In diesem Aufsatz wird untersucht, ob die Kurse auf dem Brüsseler Devisenmarkt effizient und unverzerrt zustande kommen und wie sich neue Informationen auf die Bildung der Wechselkurse auswirken. Betrachtet werden die Wechselkurse zwischen D-Mark und Belgischem Franken sowie zwischen US-Dollar und Belgischem Franken in der Zeit von Januar 1979 bis Juli 1983. D-Mark und Belgischer Franken sind durch das Europ?ische W?hrungssystem (EWS) verbunden, w?hrend der Dollar-Franken Kurs ein typisches Beispiel für einen frei floatenden Wechselkurs ist. Dieser Unterschied sowie die weitere Unterscheidung auf dem Brüsseler Devisenmarkt zwischen dem offiziellen Markt für Handelstransaktionen und dem freien Markt für Kapitaltransaktionen erm?glichen einen ausführlichen Vergleich zwischen alternativen W?hrungen und Wechselkurssystemen. Die Ergebnisse zeigen, daΒ auch auf kleineren und st?rker verzerrten Devisenm?rkten (wie dem Brüsseler) die Marktteilnehmer zukünftige Kassakurse genau vorhersagen und neue Informationen effizient verwerten. Es l?Βt sich allerdings nicht feststellen, daΒ das EWS die Effizienz und Vorhersehbarkeit auf dem Devisenmarkt erheblich verbessert. Neue Informationen spiegeln sich in unerwarteten Ver?nderungen der Zinsdifferenz wider. Den Ergebnissen zufolge führt eine Erh?hung dieser Differenz zu einem Anstieg der Kassakurse; auΒerdem kommen solche unerwarteten Schocks bei floatenden Wechselkursen h?ufiger vor als im EWS.

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Résumé Efficacité, prévisibilité et informations nouvelles aux marchés de change: Taux de change flottants versus taux SME ajustables. - Dans cet article l’auteur analyse si le marché de change de Bruxelles forme les cours de change d’une maniére efficace et quelles sont les conséquences des informations nouvelles sur la formation du taux de change. Les taux de change entre la Deutschmark (DM) et les Francs Belges (BF) et entre le $ et les BF sont considérés pour la période Janvier 1979 - Juillet 1983. La DM et les BF sont liés étroitement par le Systéme Monétaire Européen (SME), pendant que la relation $/BF est l’exemple typique d’un taux de change complétement flottant. Cela et la distinction entre marché officiel pour les transactions commerciales et marché libre pour des transactions des capitaux rendent possible une comparaison extensive entre des monnaies alternatives et des systémes différents de taux de change. Les résultats démontrent que les agents économiques prédisent précisément des taux au comptant futurs et absorbent des informations nouvelles d’une maniére efficace même dans les marchés de change plus petits et plus déformés (comme celui de Bruxelles). Mais cependant, il ne se trouve aucune évidence que le SME significativement améliore l’efficacité et la prévisibilité du marché de change. Les informations nouvelles sont reflétées en changements imprévus des différences entre les taux d’intérêt. Les résultats indiquent qu’une augmentation de cette différence cause une augmentation du taux au comptant et que ces chocs imprévus se passent plus souvent dans un systéme de taux de change flottant que dans le SME.

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Resumen Eficiencia, predictabilidad y noticias en los mercados de cambios: tipos de cambio flotantes versus tipos del cambio ajustables del Sistema Monetario Europeo. - En este trabajo estudiamos la eficiencia y el sesgo del mercado de cambios de Bruselas e investigamos el impacto de las noticias sobre la determinaci?n del tipo de cambio. Dos tipos de cambio, el del Marco alemán (DM) / Franco belga (BF) y el del US $ / BF, son observados entre enero de 1979 y julio de 1983. EL DM y el BF están vinculados através del Sistema Monetario Europeo (SME), mientras que el tipo de cambio US $ / BF constituye un tipico ejemplo de un cambio flotante. Estas caracteris icas, además de la dife enciación entre el mercado oficial para transacciones comerciales y el libre para transacciones financieras, permiten una comparaci?n entre distintos sistemas de mercado de cambios. Nuestros resultados demuestran que también en los mercados más pequenos y distorsionados, como el de Bruselas, los agentes econ?micos predicen los tipos de cambio spot futuros con precision y absorben nuevas informaciones eficientemente. En cambio no encontramos evidencia alguna que demuestre que el SME contribuye significativamente a mejorar la eficiencia y la predictabilidad del mercado de cambios. Las noticias se reflejan en variaciones inesperadas en la diferencia entre las tasas de interés. Nuestros resultados indican que un aumento de esta diferencia se traduce en un aumento del tipo de cambio spot, y que tales shocks inesperados ocurren más a menudo en un sistema de cambios flotantes que en uno de cambios ajustables como el SME.

     

The impact of exchange rate movements on multi-product firms' export performance: Evidence from China

This paper investigates the effects of RMB exchange rate movements on Chinese multi-product firms' export behavior using China's firm-level micro data and highly disaggregated customs data over 2000–2007. We find that real appreciation of RMB exerts negative effects on Chinese multi-product firms' export prices and export quantities, and the effects are significantly different across firms with different productivity as well as the product ladder within multi-product firms. In addition, we document that real appreciation of RMB narrows multi-product firms' export scope and induces firms to skew their export sales towards the best performing products. Finally, the paper explores the effects of RMB exchange rate movements on firms' export duration, and shows that real appreciation of RMB lengthens the export duration of core products but shortens the export duration of non-core products.     

The need for reserves under full and limited flexibility of exchange rates

Summary The need for reserves under various degrees of exchange rate flexibility is discussed. In line with current thinking it is held that the need for reserves is generally smaller under conditions of limited exchange rate flexibility than under stable exchange rates. Contrary to the widespread belief that there is no need for holding reserves under freely floating exchange rates, it is argued that as long as there is a distinct possibility that freely floating rates will involve adjustment costs there is a strong case for the retention of some reserves by the monetary authorities.The author, currently on leave of absence as technical assistant to the Executive Director from the Netherlands of the IMF, is an official in the International Affairs Department of the Nederlandsche Bank. He wishes to thank Dr. P. Lieftinck, J. J. Polak, Dr. H. W. J. Wijnholds, Dr. J. H. Williamson, Mr. D. H. Boot and Mr. J. P. Th. Zwartjes for their helpful comments on an earlier draft of this paper. The responsibility for the views expressed is, however, entirely his own and cannot be interpreted as representing those of the institution where he is employed.