Inflationary expectations and transmission of inflation under floating exchange rates

Zusammenfassung Inflationserwartungen und übertragung von Inflation bei flexiblen Wechselkursen. — Dieser Aufsatz befaΒt sich mit den Inflationserwartungen, die vom Devisenmarkt herrühren, und der Art, wie diese von auΒen kommende Preisinipulse auf den Inlandsmarkt übertragen. Mit einem Modell wird analysiert, wie sich nach einer exogenen Verschiebung der Wechselkurserwartungen und/oder nach einer erwarteten Ver?nderung des ausl?ndischen Preisniveaus das inl?ndische Preisniveau verh?lt. Hervorgehoben werden einige Implikationen für Devisenmarktinterventionen und stabilit?tspolitische MaΒnahmen in offenen Volkswirtschaften mit schwankenden Wechselkursen.

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Résumé Expectatives inflationnistes et transmission d’inflation sous le régime des taux de change flottants. — Cet article s’occupe d’expectatives inflationnistes qui résultent du marché de change et la transmission des perturbations de prix à l’économie locale. Un modéle est appliqué à analyser le développement du prix local qui suit à un changement exogéne des expectatives concernant le taux de change et/ou le taux attendu du changement du prix étranger. L’auteur attire l’attention sur quelques implications du modéle présenté pour ne pas intervenir aux marchés de change et pour l’efficacité des politiques de stabilisation de prix dans les économies ouvertes avec des taux de change flottants.

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Resumen Expectativas iriflacionarias y transmisi?n de inflatión bajo tipos de cambio flotantes. — Este artfculo se ocupa de la naturaleza de las expectativas inflacionarias que surgen del mercado cambiario, y de la manera que ellas transmiten las perturbaciones de precios a la economfa domèstica. El modelo se emplea para analizar el comportamiento domèstico de precios que le sigue a un desplazamiento exógeno en las expectativas respecta del tipo de cambio y/o la tasa de cambio esperada en el nivel de precios externo. El artfculo centra la atenci?n sobre algunas implicaciones de este marco particular para la no-intervención en los mercados cambiarios extranjeros, y para la efectividad de polfticas de estabilización de precios en economfas abiertas con tipos de cambio volátiles.

     

Policies and strategies for sustainable development in Bangladesh

The concept of sustainable development, its relevance for Bangladesh, and policies and strategies for promoting it in Bangladesh are discussed. Economic growth, population growth, mobilization of resources, the role of women, devolution and decentralization, equity and protection of the environmental base are treated as key issues, with emphasis given to the effective implementation of strategies for promoting sustainable development.     

Futures for Pakistan: Deluge or destiny?

Fifty years of Pakistan history are characterized by two major issues: first, ideological, ie the role of Islamic politico-social ideals and the processes for their implementation, and the challenge to them from the forces of secularism; and second, the clash and conflict between the forces of democracy and despotism. These two areas have mostly been examined in the literature as distinct and somewhat autonomous conflicts. The fact is that in the Muslim context they represent two sides of the same coin. The author argues that democratization is a stepping stone in Islamization and fulfilment of Islamic aspirations is possible only through promotion of democratic processes.     

SOCIAL SECURITY AND THE POOR: Choices for Developing Countries

There is an urgent need to provide an effective safety net forthe poorest in societies ranging from socialist countries undergoingreform to Sub-Saharan African economies. This article examinessocial security systems in industrial countries and explorestheir relevance to developing countries. The objective of socialsecurity is defined broadly as public action, including thatby communities, to protect the poor and vulnerable from adversechanges in living standards. Relevant instruments include employmentand income guarantees, and also such formal policy instrumentsas assistance, social insurance, and family allowances. Thearticle highlights issues that arise in providing social securityin developing countries, particularly its effectiveness in protectingthe target groups.      

Public Revenue‐Expenditure Nexus in South Africa: Are there Asymmetries?

This paper re‐examines the government revenue and expenditure relationship in South Africa using Enders and Siklos' Threshold adjustment and Granger causality tests. The paper allows for structural breaks in the unit root and cointegration tests. The results indicate the absence of any asymmetries in both the threshold autoregression and momentum threshold autoregression specifications of adjustments in the South African's budgeting process. The estimated symmetric error‐correction models provide support for the fiscal synchronization hypothesis of government revenues and expenditures for long‐run and short‐run dynamic equilibrium. These findings indicate that the South African fiscal authorities should try to maintain or even improve the control of their fiscal policy instruments to sustain the prudent budgetary process.     

China's economic development: does exchange rate and FDI nexus matter?

This study aims to investigate the relationship between China's exchange rate, foreign direct investment (FDI) inflows, and economic development. We applied the bound testing approach on aggregate level data from 1981 to 2013. The results showed that the Chinese economy benefitted from a lower exchange rate over this period, and that there was a direct link between FDI inflows and economic development on an aggregate level both in the long and short run. The results of the Granger causality test identified a long‐ and short‐run association among these variables. The GMM estimations with dummies for financial crises and RMB exchange rate policy fluctuations also confirmed the growth enhancing impact of the exchange rate and FDI inflows. To promote sustainable economic development in the future, China should focus on improving the levels of domestic investment and human capital, as well as supervising the level of openness and capital controls.     

Monetary Policy in the Industrial World: Reflections on some Basic Issues

Abstract

This paper is a general assessment of monetary policy in major OECD countries during the 1990s. Within a simple policy framework that combines money growth, nominal income, and an open economy IS-LM type Mundell-Fleming model, the paper discusses the major strands in the conduct of monetary policy in developed industrial economies. It throws light on such problems as “rules versus discretion”, management of exchange rates, the effect of monetary changes on income and prices, and the rupture of monetary policy with other instruments of economic policy that also affect the economy.