nep-ifn New Economics Papers
on International Finance
Issue of 2011‒11‒07
four papers chosen by
Ajay Shah
National Institute of Public Finance and Policy

  1. The end of an era? The medium- and long-term effects of the global crisis on growth in low-income countries By Berg, Andrew; Papageorgiou, Chris; Pattillo, Catherine; Spatafora, Nicola
  2. The international monetary system is changing: What opportunities and risks for the euro? By Ignazio Angeloni; André Sapir
  3. The Signalling Channel of Central Bank Interventions: Modelling the Yen/US Dollar Exchange Rate By Yu-Fu Chen; Michael Funke; Nicole Glanemann
  4. The international role of the dollar: Does it matter if this changes? By Linda Goldberg

  1. By: Berg, Andrew; Papageorgiou, Chris; Pattillo, Catherine; Spatafora, Nicola
    Abstract: This paper investigates the medium- and long-term growth effects of the global financial crises on Low-Income Countries (LICs). Using several methodological approaches, including impulse response function analysis, growth spells techniques and panel regressions, we show that external demand (ED) shocks are not historically associated with sharp declines in output growth. Given existing evidence that LICs were primarily impacted by such a shock in the global financial crisis, our analysis provides some optimism on the chances that LICs will avoid a protracted period of slow growth. However, we also show that there seem to be persistent output losses associated with ED shocks in the medium-run. In terms of policy implications, our analysis provides evidence that countries with lower deficits, lower debt, more flexible exchange rate regimes, and a higher stock of international reserves are more likely to dampen the effects of an ED shock on growth. --
    Keywords: Global financial crisis,external shocks,low-income countries,medium- and long-term growth,impulse response functions,growth spells,panel growth regressions
    JEL: O11 O19 O23 O47
    Date: 2011
  2. By: Ignazio Angeloni; André Sapir
    Abstract: After a thirty-year pause, discussions on the future of the international monetary system (IMS) have restarted. This is partly due to the fact that the IMS has facilitated, or at least not prevented, the economic and financial imbalances that led to the recent crisis. This paper argues that the international position of the US dollar is likely to erode in the coming years, though the speed of the process is uncertain. This will create a demand for other currencies to be used internationally as means of payment and store of value. The most likely candidates for filling the partial vacuum created by the dollarâ??s decline are the euro and the Chinese renminbi. The probability that the renminbi will eventually become one of the worldâ??s key currencies is very high, but the speed of the process is uncertain. As far as the euro is concerned, much will depend on if and how the sovereign debt crisis is resolved. Our view is that the crisis will be dealt with and that it will result in radical steps towards fiscal and financial integration. If such steps are taken, the euro will secure both internal stabilisation and a growing international role.
    Date: 2011–11
  3. By: Yu-Fu Chen; Michael Funke; Nicole Glanemann
    Abstract: This paper presents a theoretical framework analysing the signalling channel of exchange rate interventions as an informational trigger. We develop an implicit target zone framework with learning in order to model the signalling channel. The theoretical premise of the model is that interventions convey signals that communicate information about the exchange rate objectives of central bank. The model is used to analyse the impact of Japanese FX interventions during the period 1999 -2011 on the yen/US dollar dynamics.
    Keywords: Exchange rates, interventions, Japan
    JEL: C61 E58 F31
    Date: 2011–10
  4. By: Linda Goldberg
    Abstract: There is often speculation that the international roles of currencies may be changing. This paper presents the current status of these roles. The U.S. dollar continues to be the dominant currency across various uses. Yet, such a role may change over time. If this occurs, there could be consequences for seignorage returns, U.S. funding costs, the dollar’s value, U.S. insulation from foreign shocks, and U.S. global influence. The paper concludes with a discussion of recent research on related themes and questions for future study.
    Keywords: Dollar, American ; Foreign exchange
    Date: 2011

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