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on International Finance |
| By: | Linda S. Goldberg |
| Abstract: | International financial linkages, particularly through global bank flows, generate important questions about the consequences for economic and financial stability, including the ability of countries to conduct autonomous monetary policy. I address the monetary autonomy issue in the context of the international policy trilemma: countries seek three typically desirable but jointly unattainable objectives: stable exchange rates, free international capital mobility, and monetary policy autonomy oriented toward and effective at achieving domestic goals. I argue that global banking entails some features that are distinct from broad issues of capital market openness captured in existing studies. In principal, if global banks with affiliates established in foreign markets can reduce frictions in international capital flows then the macroeconomic policy trilemma could bind tighter and interest rates will exhibit more co-movement across countries. However, if the information content and stickiness of the claims and services provided are enhanced relative to a benchmark alternative, then global banks can weaken the trilemma rather than enhance it. The result is a prediction of heterogeneous effects on monetary autonomy, tied to the business models of the global banks and whether countries are investment or funding locations for those banks. Empirical tests of the trilemma support this view that global bank effects are heterogeneous, and also that the primary drivers of monetary autonomy are exchange rate regimes. |
| JEL: | E44 F36 G32 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19497&r=ifn |
| By: | Heericourt, Jerome; Poncet, Sandra |
| Abstract: | This paper studies how firm-level export performance is affected by Real Exchange Rate (RER) volatility and investigates whether this effect depends on existing financial constraints. The empirical analysis relies on export data for more than 100,000 Chinese exporters over the 2000-6 period. The results confirm a trade-deterring effect of RER volatility. Firms'decision to begin exporting and the exported value decrease for destinations with higher exchange rate volatility; besides, this effect is magnified for financially vulnerable firms. As expected, financial development seems to dampen this negative impact, especially on the intensive margin of export. These results provide micro-founded evidence suggesting that the existence of well-developed financial markets allows firms to hedge exchange rate risk. The results also support a key role of financial constraints in determining the macro impact of RER volatility on real outcomes. |
| Keywords: | Emerging Markets,Economic Conditions and Volatility,Currencies and Exchange Rates,Debt Markets,Fiscal&Monetary Policy |
| Date: | 2013–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6638&r=ifn |
| By: | Kim Huynh; Teodora Paligorova; Robert Petrunia |
| Abstract: | A large body of empirical literature investigates differences in financing structures across firms. Private firms’ financing receives little attention due to the lack of data. Using administrative confidential data on the universe of Canadian corporate firms, we compare financing relationships for private and public firms. Leverage ratios are lower for public firms and the difference is almost entirely driven by private firms’ stronger reliance on short-term debt. We also find that private and public firms’ debt financing responds differently to industry shocks. In periods of positive industry shocks, private firms rely more on long-term debt than public firms, while the former use more short-term debt when industry conditions deteriorate. |
| Keywords: | Credit and credit aggregates; Financial markets |
| JEL: | G30 L11 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:bca:bocawp:13-36&r=ifn |