nep-cba New Economics Papers
on Central Banking
Issue of 2005‒05‒29
two papers chosen by
Roberto Santillan

  1. International Capital Markets and Exchange Rate Stabilization in the CIS By Gunther Schnabl
  2. Is a Declining Dollar Good for Either the U.S. Economy or The Global Ecnomy? By Paul Davidson

  1. By: Gunther Schnabl (Tuebingen University)
    Abstract: In this paper, we examine the rationale for dollar and euro pegging in Russia and the CIS. We consider macroeconomic stabilization and transaction costs for international trade as rationales for pegging to the euro. Dollarization of international assets and liabilities are examined as determinants of exchange rate stabilization against the dollar. The impact of network externalities from a common anchor for all CIS countries is explored. Tests on de facto exchange rate stabilization reveal that dollar pegging has been pervasive in the CIS.
    Keywords: CIS, Exchange Rate Systems
    JEL: F31 F32
    Date: 2005–05–24
  2. By: Paul Davidson (New School University)
    Abstract: This paper explains why a declining dollar is likely to prove deleterious to both the US economy and the Global economy. It provides statistics to demonstrate that despite a 25 percent drop in the dollar in 3 years, the US trade deficit has doubled in value. It explains why this doubling has occurred in terms of the absence of the Marshall- Lerner condition. Finally, the paper provides a new alternative policy perscription that will alleviate the US trade dficit hile promoting more rapid global economic growth for the entire global economy.
    Keywords: Marshall-Lerner condition, trade deficits, flexible vs. fixed exchange rates
    JEL: F1 F2
    Date: 2005–05–20

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