Introduction to the Special Issue on “Exchange Rates,Financial Integration and Uncertainty”

Open Economies Review -     

Exchange Rates and the Trade Balance for Dynamic Asian Economies—Does the J-Curve Exist for Singapore,Malaysia, and Korea?

The purpose of this article is to examine the relationship between the real trade balance and the real exchange rate for bilateral trade in merchandise goods between Singapore, Korea, and Malaysia and the USA and Japan on a quarterly basis over the period 1970 to 1996 using the partial reduced form model of Rose and Yellen (1989) derived from the two-country imperfect substitutes model. With the exception of Korean trade with the USA, and in line with recent work using a similar methodology, our findings suggest that the real exchange rate does not have a significant impact on the real trade balance, and for Singapore and Malaysia we can find no persuasive evidence for J-curves. For Korea, however, the data were consistent with some J-curve effects with respect to both Japan and the USA. Moreover, it is possible that for Korea these effects were being masked or muted by small country pricing of exports in foreign currency, but there was no evidence that imports subsequently fell as the lag length on the real exchange rate increased, which would be required to support a strict interpretation of the J-curve.     

Openness to Trade and the Potency of Monetary Policy: How Strong is the Relationship?

Economic theory suggests that an economy's openness to international trade reduces the ability of monetary policy to affect output. Using quarterly data from the 1960:1–1993:4 period for a set of eight countries (Australia, Canada, Germany, Italy, Japan, South Africa, the U.K., and the U.S.A.), this article's empirical results support this theoretical prediction: the more open the economy, the smaller the output effects of a given change in the money supply. This finding, robust across all the different specifications and estimation methods examined, has straightforward implications for stabilization policy. Moreover, it suggests that an economy's net benefit from joining a monetary union is increasing with the economy's openness to foreign trade.     

Comment on Aliber's “Capital Flows,Exchange Rates,and the New International Financial Architecture: Six Financial Crises in Search of a Generic Explanation”

Open Economies Review -     

Comment on Savona,Maccario, and Oldani's “On Monetary Analysis of Derivatives”

Open Economies Review -     

Introduction to the special issue on ‘global trading system and protectionism: China,the United States and Europe’

ABSTRACT

In this Introduction to our Special Issue, we provide detailed and critical comments and summaries of the excellent papers. The papers are important contributions to the China-U.S. and China-Europe economic and trade issues in the context of the global trading environment, as shaped by the current unorthodox policies of the Trump Administration. The wonderful papers dealt with relevant issues related to international trade, investment, national security, trade laws, intellectual property rights laws, political science, business, etc. They constitute a must-read for academics, policy and business researchers, think tank fellows, experts in international organizations, as well as government-related researchers in various national capitals. The three Co-editors are all experienced and accomplished academics with vast experiences in public policies. As academics, they may hold different views but their unique and diverse perspectives provide an important background to the Special Issue. They jointly contributed major efforts to this timely and important Special Issue.     

Bank Capital Regulation,Economic Stability,and Monetary Policy: What Does the Academic Literature Tell Us?

This paper surveys academic research exploring the macroeconomic and monetary policy implications of the Basel I and Basel II systems of risk-based capital requirements. This research indicates that regulatory tightening of capital ratios can generate aggregate shocks, that capital regulation can enhance the procyclicality already inherent in banking, and that capital requirements can influence macroeconomic outcomes and alter the monetary policy transmission mechanism. The paper offers suggestions for future avenues of research on the interplay between bank capital regulation, the economy, and monetary policymaking. Although any errors are my own, I received very helpful comments on earlier versions from Kenneth Kopecky, John Pattison, and Jack Tatom. I am grateful for research support from Networks Financial Institute.     

Japan's Policy Stance on East Asian Neo-Regionalism: From Being a “Reluctant”, to Becoming a “Proactive” State

Abstract

This article is a theoretically grounded empirical contribution aimed at shedding light on Japan's policy stance on East Asian neo-regionalism. It aims to examine the recent region-building process in East Asia. The dynamics in East Asia suggest that regional institutionalization, brought about by norm diffusion based on the idea of neo-regionalism, is likely to follow a progressive and evolutionary trajectory through the institutionalization of the Association of Southeast Asian Nation (ASEAN)?+?3 (South Korea, Japan and China). It provides a wide spectrum of regional-integrationist perspectives in order to offer as full a picture as possible of Japan's role in promoting regional integration in East Asia. The key finding of this article is that Japan has changed from a being “reluctant”, to becoming a “proactive” state in the context of regional collaboration in East Asia.     

Empirical Study on New Issue Long-term Pricing Performance ——Subject to the Hypothesis and Proof of Shell Resource Value

This paper calculates the long-term return of the IPOs in China＇s stock market, we find that the positive abnormal return of new issues lasts for 7 months after adjusted by the market return. The author explains the long-term market performance of IPOs with the concept of ＂Shell Resource＂ and supplies the related proofs.     

Monetary Policy in Austria–Hungary, 1876–1913: An Econometric Analysis of the Determinants of the Central Bank’s Discount Rate and the Liquidity Ratio

This paper presents a model to explain the official discount rate of the Central Bank of Austria–Hungary from 1876 to 1913. The discount rate is assumed to depend on the liquidity ratio of the Bank, defined as the ratio of its stock of metals to banknotes issued, and on changes in foreign discount rates. The paper also presents an equation explaining the liquidity ratio. We use “not equally spaced chronologically ordered data” referring to the 50 discount rate changes enacted. The regressions confirm that the liquidity ratio was the main determinant of the discount rate and that Germany (and not Great Britain) played a significant role in determining the Austro–Hungarian discount rate and the liquidity ratios, supporting the view that the classical gold standard was a decentralized multipolar system rather than a system fully dominated by London as suggested by Keynes. The regressions also suggest that, although Austria–Hungary had an inconvertible paper currency (1879–1892) and fluctuating exchange rates (1876–1895) and formally joined the gold standard only in 1902, it “shadowed” the behaviour of gold standard Central Banks with such consistency that the stability of the estimated regressions was relatively unaffected by the frequent institutional changes.

Financing Community Development in the US: A Comparison of “War on Poverty” and 1990s-Era Policy Approaches

This paper first analyzes the role of finance in community development, and then contrasts 1990s development-financing policies with those undertaken decades earlier in the context of the federal “War on Poverty.” It is shown that the Clinton-Bush era programs in support of community development were less extensive than War on Poverty programs. Further, they were weighted toward large banks and large commercial real-estate projects, and did not take into account the implications of the changing strategies and activities of private-sector banking firms. Consequently, programs implemented in the 1990s and afterward by the Clinton and Bush Administrations had relatively little impact. This paper then suggests some lessons for the new Administration.