nep-mon New Economics Papers
on Monetary Economics
Issue of 2015‒04‒11
29 papers chosen by
Bernd Hayo
Philipps-Universität Marburg

  1. Does Monetary Policy Matter For Trade? By Chong, Terence Tai Leung; Wong, Kin Ming
  2. Effects of a Quantitative Easing Monetary Policy Exit Strategy on East Asian Currencies By OGAWA Eiji; WANG Zhiqian
  3. A Monetary Analysis of the Liquidity Trap By João Braz Pinto; João Sousa Andrade
  4. The Outlook for the Economy and Monetary Policy Communications By Mester, Loretta J.
  5. Monetary Union with a Single Currency and Imperfect Credit Market Integration By Vincent Bignon; Régis Breton; Mariana Rojas Breu
  6. Monetary Policy with Diverse Private Expectations By Mordecai Kurz; Maurizio Motolese; Giulia Piccillo; Howei Wu
  7. Monetary News Shocks By Nadav Ben Zeev; Christopher M. Gunn; Hashmat U. Khan
  8. The Economic Outlook, Monetary Policy, and Getting Back to Normal By Mester, Loretta J.
  9. CORE INFLATION INDICATORS FOR SAUDI ARABIA By William Barnett; Ryadh M. Alkhareif
  10. A structural investigation of the Chinese economy with a hybrid monetary policy rule By Ran Li; Jiao Wang
  11. Bubbles and Central Banks: Historical Perspectives By Brunnermeier, Markus K; Schnabel, Isabel
  12. What Should Central Banks Target? Evidence on the Impact of Monetary Policy Regimes on Economic Growth By Chong, Terence Tai Leung; Wong, Kin Ming
  13. Forward Guidance in Extraordinary Times, in Normal Times, and Betwixt the Two By Mester, Loretta J.
  14. Inflation targeting and the global financial crisis: successes and challenges By Williams, John C.
  15. Forward Guidance and Communications in U.S. Monetary Policy By Mester, Loretta J.
  16. Do the International Monetary and Financial Systems Need More than Short-Term Cosmetics Reforms? By Sau, Lino
  17. Central Bank Asset Puchases I: The Theory By Carolin Raab; Philipp König; Kerstin Bernoth
  18. The Economic Outlook, Monetary Policy, and Communications: Progress on Multiple Journeys By Mester, Loretta J.
  19. "Unconventional Monetary Policy and its External Effects: Evidence from Japan’s Exports" By Shin-ichi Fukuda; Tsutomu Doita
  20. Large-Scale Asset Purchases by Central Banks II: Empirical Evidence By Kerstin Bernoth; Philipp König; Carolin Raab
  21. Nominal Term Structure and Term Premia: Evidence from Chile By Luis Ceballos; Alberto Naudon; Damián Romero
  22. Recent Developments in U.S. Monetary Policy: From Extraordinary Back to Ordinary By Mester, Loretta J.
  23. Exchange rate misalignments and the external balance under a pegged currency system By Blaise Gnimassoun
  24. Transition from black to official markets for foreign exchange in Myanmar By Kubo, Koji
  25. Adjustments of Capital Account Restrictions and Exchange Rate Regimes in East Asia By Yoshino, Naoyuki; Kaji, Sahoko; Asonuma, Tamon
  26. The Nexus of Macroprudential Supervision, Monetary Policy, and Financial Stability By Mester, Loretta J.
  27. Invoice Currency: puzzling evidence and new questions from Brazil By Daniel Gersten Reiss
  28. Challenges of price stability, growth and employment in Bangladesh : role of the Bangladesh Bank By Muqtada, Muhammed
  29. Dissent in FOMC Meeting and the Announcement Drift By Carlos Madeira; Joao Madeira

  1. By: Chong, Terence Tai Leung; Wong, Kin Ming
    Abstract: There is a large literature on the effect of exchange rate arrangements on trade. The monetary policy used in the floating exchange rate regime, however, is usually ignored and unidentified in the empirical studies. This makes the effect of alternative monetary policy regimes on trade remains largely unknown. This paper sheds light on this area by examining the effect of two well-defined monetary policy regimes, namely exchange-rate targeting and inflation targeting regimes, on bilateral and multilateral trade. Our result suggests a moderate positive effect of inflation targeting policy on bilateral trades between two inflation targeting countries. This effect of inflation targeting, even much moderate than the effect of currency union and a fixed exchange rate at the bilateral level, could exist in the bilateral trades with a large number of trading partners under the same regime. This implies that inflation targeting regime may not have a lower level of multilateral trade than exchange-rate targeting regime. We further support this view with an analysis of multilateral trade.
    Keywords: Monetary Policy Regimes; Inflation Targeting; Exchange-rate Targeting; Gravity Model; Trade
    JEL: E42 E52 E58 F14
    Date: 2015–04–12
  2. By: OGAWA Eiji; WANG Zhiqian
    Abstract: The Federal Reserve Board (FRB) of the United States has decided to end its quantitative easing monetary policy as the global financial crisis is subsiding there. It is expected that it will raise the federal funds (FF) rate from almost zero in the near future. Large amounts of money which flowed from the United States into emerging market countries are beginning to flow back to it. As a result, the emerging market countries are beginning to face depreciation of their home currencies and drops in stock prices. Based on this situation in the global economy, we consider the effects of changes in the monetary policy, especially the effects of raising the interest rates in the United States on East Asian currencies in this paper. Specifically, we use data on interest rates as a monetary policy instrument to investigate how changes in the interest rates in the United States affect interest rates, exchange rates, and capital flows in the East Asian emerging market countries. Given the analytical results, we conclude that East Asian countries would face capital outflows that depreciate their home currencies while having upward pressure against their own interest rates if the FRB adopts a quantitative easing monetary policy exit strategy and raises the interest rates.
    Date: 2015–03
  3. By: João Braz Pinto (Deloitte Touche Tohmatsu Limited, Portugal); João Sousa Andrade (Faculty of Economics, University of Coimbra and GEMF, Portugal)
    Abstract: Keynes has emphasized a particular situation in which the liquidity preference becomes absolute, leading to monetary policy ineffectiveness: the near zero nominal rate of interest does not allow negative values of the real interest rate. This situation is termed liquidity trap (LT) and although popularized by the IS-LM Hicks-Hansen framework it was authored by Robertson. It was also elected as the Keynesian case against the classical one. In 1998 Krugman recovered the name by applying it to the Japanese episode of the 1990's. The “lowflation” environment in USA and Europe brought again the LT to the forefront. The quantitative easing monetary policy was followed in Japan and is now applied in the USA and EMU as a solution to overcome the LT. But the LT has been erroneously considered as a money demand problem and at the same time denied as a “banking problem” in the words of Krugman. We contend that the current situation should be interpreted as a “banking problem” that impedes the transformation of the monetary base into money supply. In order to prove our thesis we study the behavior of the USA money multiplier and the income velocity of money before the beginning of the current crisis and during the crisis and by forecasting and estimating a VAR and a VECM model we compare the normal situation of monetary policy efficiency with the situation of LT monetary policy inefficiency.
    Keywords: Liquidity Trap, Money Supply, Monetary Base Multiplier, ARIMA, VAR and VECM models.
    JEL: E12 E3 E4 E51 E6
    Date: 2015–03
  4. By: Mester, Loretta J. (Federal Reserve Bank of Cleveland)
    Date: 2015–03–30
  5. By: Vincent Bignon; Régis Breton; Mariana Rojas Breu
    Abstract: This paper shows that currency arrangements impact on credit available through default incentives. To this end we build a symmetric two-country model with money and imperfect credit market integration. With the Euro Area context in mind, we capture differences in credit market integration by variations in the cost for banks to grant credit for cross-border purchases. We show that for a high enough level of this cost, currency integration may magnify default incentives, leading to more stringent credit rationing and lower welfare than in a regime of two currencies. The integration of credit markets restores the optimality of the currency union.
    Keywords: banks, currency union, monetary union, credit, default
    JEL: E50 F3 G21
    Date: 2015–03
  6. By: Mordecai Kurz (Stanford University); Maurizio Motolese (Università Cattolica di Milano); Giulia Piccillo (Utrecht University); Howei Wu (Shanghai University of Finance and Economics)
    Abstract: We study the impact of diverse beliefs on conduct of monetary policy. Individual belief is modeled by a state variable that defines an individual’s perceived laws of motion. We use a New Keynesian Model that is solved with a quadratic approximation hence individual decisions are quadratic functions. Aggregation renders the belief distribution an aggregate state variable. Although the model has standard technology and policy shocks, diverse expectations change materially standard results about a smooth trade-off between inflation volatility and output volatility. Our main results are summed up as follows:<br> (i) The policy space contains a curve of singularity which is a collection of policy parameters that divides the space into two sub-regions. Some trade-off between output and inflation volatilities exists within each region and some across regions. (ii) The singularity causes volatility of variables to be non monotone in policy parameters. Policy-makers cannot assume a more aggressive policy will change outcomes in a predictable manner. (iii) When beliefs are diverse a central bank must also consider the volatility of individual consumption and the related volatility of financial markets. We show aggressive anti-inflation policy increases consumption volatility and aggressive output stabilization policy entails rising inflation volatility. Efficient central bank policy must therefore be moderate. (iv) High optimism about the future typically lowers aggregate output and increases inflation. This “stagflation†effect is stronger the stickier prices are. Policy response is muted since the effects of higher inflation and lower output on interest rates partially cancel each other. Effective policy requires targeting exuberance directly or its effects in asset markets. Central banks already do so with short term interventions. (v) The observed high serial correlation of 0.80 in policy shocks contributes greatly to market volatility and we show that a reduction in persistence of central bank’s deviations from a fixed rule will contribute to stability. (vi) Belief dispersion is measured by cross sectional standard deviation of individual beliefs. An increased belief diversity is found to make policy coordination harder and results in lower aggregate output and lower rate of inflation. Bank policy can lower belief dispersion by being more transparent.
    Keywords: New Keynesian Model; heterogenous beliefs; market state of belief; Rational Beliefs; monetary policy rule
    JEL: C53 D8 D84 E27 E42 E52 G12 G14
    Date: 2015–03
  7. By: Nadav Ben Zeev (Ben-Gurion University of the Negev); Christopher M. Gunn; Hashmat U. Khan (Department of Economics, Carleton University)
    JEL: E32 E52 E58
    Date: 2015–03–17
  8. By: Mester, Loretta J. (Federal Reserve Bank of Cleveland)
    Date: 2015–03–30
  9. By: William Barnett (Department of Economics, The University of Kansas; Center for Financial Stability, New York City; IC2 Institute, University of Texas at Austin); Ryadh M. Alkhareif (Economic Research Department, Saudi Arabian Monetary Agency)
    Abstract: This paper constructs and analyzes core inflation indicators for Saudi Arabia for the period of March 2012 to May 2014 using two alternative approaches: the Exclusion Method (ex food and housing/rent) and the Statistical Method. The findings of the analysis suggest that the ex food and housing/rent inflation is more volatile than the overall CPI inflation over the sample period. In contrast, the statistical core inflation is relatively more stable and less volatile. Moreover, the ex food and housing/rent inflation is only weakly correlated with headline inflation, whereas the statistical core inflation exhibits a stronger correlation. This combination of lower volatility and higher correlation with headline inflation makes the statistical method a much better choice for policymakers. From a monetary policy standpoint, using a bundle of core inflation measures, including both properly constructed Exclusion and Statistical methods, is more desirable, especially when variation across measures is widespread, as is the case in Saudi Arabia.
    Keywords: consumer price index, core inflation, generalized dynamic factor model, monetary policy.
    JEL: C51 E31 E58
    Date: 2015–03
  10. By: Ran Li; Jiao Wang
    Abstract: In this paper, we aim to understand how monetary policy is conducted in China and what the main sources of fluctuations in China’s business cycle are. To this end, we extend a standard New Keynesian dynamic stochastic general equilibrium model with financial frictions and investment-specific technology shocks. We incorporate a hybrid form of monetary policy rule and employ a Bayesian estimation strategy using Chinese data. We find that the People’s Bank of China conducts monetary policy by adjusting the policy rate in response to inflation, output growth as well as real money growth. We also find that neutral technology shocks are the main drivers of the fluctuations in output and consumption while the investment-specific technology shock is the primary source of the variation in investment. This paper offers a new way of examining the rule of China’s monetary policy and indicates a structural break of the neutral technology development that may have caused the slowing down of GDP growth since 2010.
    Keywords: Monetary policy, business fluctuation, Bayesian estimation, dynamic stochastic general equilibrium model, China
    JEL: E32 E43 E52
    Date: 2015–04
  11. By: Brunnermeier, Markus K; Schnabel, Isabel
    Abstract: This paper reviews some of the most prominent asset price bubbles from the past 400 years and documents how central banks (or other institutions) reacted to those bubbles. The historical evidence suggests that the emergence of bubbles is often preceded or accompanied by an expansionary monetary policy, lending booms, capital inflows, and financial innovation or deregulation. We find that the severity of the economic crisis following the bursting of a bubble is less linked to the type of asset than to the financing of the bubble—crises are most severe when accompanied by a lending boom and high leverage of market players, and when financial institutions themselves are participating in the buying frenzy. Past experience also suggests that a purely passive “cleaning up the mess” stance toward the buildup of bubbles is, in many cases, costly. Monetary policy and macroprudential measures that lean against inflating bubbles can and sometimes have helped deflate bubbles and mitigate the associated economic crises. However, the correct implementation of such proactive policy approaches remains fraught with difficulties.
    Keywords: bubbles; capital flows; credit; macroprudential policy; monetary policy
    JEL: E44 E52 F34 G01 N10
    Date: 2015–04
  12. By: Chong, Terence Tai Leung; Wong, Kin Ming
    Abstract: Economists and policy-makers have long sought the ideal framework for monetary policy as it is arguably one of the most important tools for government to influence the economy. Exchange rate and inflation are believed to be the most appealing anchors for providing guidance to the conduct of monetary policy and are thus widely used in the real world. Most existing studies on the effect of exchange-rate arrangements and inflation targeting on economic growth suffer from the absence of a clear counterfactual, rendering it difficult to interpret their results. Based on a new classification scheme on monetary policy regimes, this paper helps to fill that gap by investigating the effect of monetary policy regimes on growth. Our results consistently support that an inflation targeting regime has a positive impact on economic growth when compared with an exchange-rate targeting regime.
    Keywords: Monetary Policy Regimes; Inflation Targeting; Exchange-rate Targeting; Economic Growth
    JEL: E42 E52 E58 F43
    Date: 2015–04–07
  13. By: Mester, Loretta J. (Federal Reserve Bank of Cleveland)
    Abstract: Good evening and thank you very much for the invitation to speak to the Money Marketeers. I understand that a long line of Federal Reserve presidents and governors have addressed your distinguished group and I am very honored to follow in their footsteps. Tonight I will discuss the role of communications in Fed policymaking, focusing on the FOMC’s forward guidance on the future path of policy. Of course, my remarks will reflect my own views and not necessarily those of the Federal Reserve System or my colleagues on the Federal Open Market Committee.
    Date: 2015–03–30
  14. By: Williams, John C. (Federal Reserve Bank of San Francisco)
    Abstract: Essay presentation to the South African Reserve Bank Conference on Fourteen Years of Inflation Targeting in South Africa and the Challenge of a Changing Mandate
    Date: 2014–10–31
  15. By: Mester, Loretta J. (Federal Reserve Bank of Cleveland)
    Abstract: Good evening and thank you very much for the invitation to speak in the Imperial Business Insights Series. I have learned that this successful series is now in its third year and it has brought speakers to the podium to discuss a wide range of topics in the major themes of finance, innovation, and entrepreneurship. Tonight I will speak about forward guidance and monetary policy communications. I think it is clear that this topic is related to finance, but I submit that it is also related to the two other themes of your series: innovation and entrepreneurship. Since the onset of the 2008 financial crisis, policymakers have had to be quite innovative in addressing the challenges facing the global economy. They have had to be entrepreneurial in developing new economic models and monetary policy tools to help navigate the uncharted waters of the past six years. Tonight, I’ll give my views on one of those tools, forward guidance, and the role it plays as a part of the broader communications provided by monetary policymakers. Of course, my remarks will reflect my own views and not necessarily those of the Federal Reserve System or my colleagues on the Federal Open Market Committee.
    Date: 2015–03–30
  16. By: Sau, Lino (University of Turin)
    Abstract: The storm that has rocked our world has opened an interesting debate among economists and policy makers concerning with the need of a new international monetary and financial architecture. The monetary and financial regime that has been in force since the collapse of Bretton Woods (B-W), encourages indeed the persistence of unsustainable dynamics which spawn increasingly serious crises and it is unable of imparting an acceptable macro-economic discipline device to the world's economy. It became apparent that the global role of a key currency along with the deregulation of financial markets (neo-liberal paradigm) have acted as underlying conditions for the US financial crisis up to present situation and the following contagion to Europe. In this paper I point out the inadequacy of the institutional arrangements underlying the international monetary and financial regimes and I outline the relevance to the current debate of Keynes original plan, suggested rightly 70 years ago, that never born.
    Date: 2014–10
  17. By: Carolin Raab; Philipp König; Kerstin Bernoth
    Abstract: In the face of interest rates having hit their zero lower bound in major economies, large-scale asset purchases have become an important weapon of central banks in recent years. It is, however, not clear whether and under which circumstances such policy measures produce the desired effects. This round-up provides a selective overview of theoretical research that has been devoted to understand under what conditions central bank asset purchases lead to reductions in longer-term interest rates and produce stimulating effects on the overall economy.
    Date: 2015
  18. By: Mester, Loretta J. (Federal Reserve Bank of Cleveland)
    Abstract: It is a real pleasure to be here today and to address the Economic Club of Pittsburgh, the CFA Society Pittsburgh, and the Pittsburgh Society of Investment Professionals. I have been on quite a journey during my first three months on the job as the new president of the Cleveland Fed. Not only have I attended my first two Federal Open Market Committee meetings in Washington as a voting member, but I have been getting to know the Fourth Federal Reserve District, which includes Ohio, western Pennsylvania, the northern panhandle of West Virginia, and eastern Kentucky. One of my first stops was to Pittsburgh, and it is wonderful to be back here today for my first public speech since becoming president in June. The economy and monetary policy have been on journeys of their own. Today, I want to share my views on both. But before I continue, let me note that these are my own views and not necessarily those of the Federal Reserve System or my colleagues on the Federal Open Market Committee.
    Date: 2015–03–30
  19. By: Shin-ichi Fukuda (Faculty of Economics, The University of Tokyo); Tsutomu Doita (Graduate School of Economics, The University of Tokyo)
    Abstract: In this paper, we explore whether unconventional monetary policy in Japan had a negative spillover effect on the rest of the world. After Prime Minister Abe advocated the new policy regime, the Japanese yen depreciated substantially which raised a concern that it would have a beggar-thy-neighbor effect in the region. However, despite the yen’s depreciation, Japan’s exports did not show significant improvement. To explain why the exports did not increase, this paper focuses on weak external demand and increased overseas production. Our theoretical model shows that a small change of the exchange rate has no effect on exports because of fixed costs when shifting the plant location across the countries. However, it also implies that a change of the exchange rate has a significant effect on the exports either when the exchange rate depreciation coincides with strong external demand or when the appreciation coincides with weak external demand. In the latter part of the paper, we examine the validity of these theoretical implications through estimating a simple export function in Japan and through calibrating our export function. In both of the experiments, we confirm that the model can track Japan’s exports reasonably well especially after the new policy regime started. --
    Date: 2015–03
  20. By: Kerstin Bernoth; Philipp König; Carolin Raab
    Abstract: Not just since the European Central Bank announced the large-scale purchase of government bonds a few weeks ago, large-scale asset purchases have always been a controversially discussed topic. This DIW Roundup summarizes the measures that have been taken by central banks in Japan, USA and UK and the empirical evidence about the impacts of these measures on financial markets and the real economy.
    Date: 2015
  21. By: Luis Ceballos; Alberto Naudon; Damián Romero
    Abstract: The downward trend exhibited in Chile's nominal 10-year interest rate since 2003 has been a common pattern shared by other developed and developing economies. To understand the behavior of the nominal yield curve in Chile, we rely on an affine dynamic term structure model (DTMS) which allows to decompose the term structure into the expected short-term premium (related to the monetary policy expectation) and a term premia. We show that most of the fall of long-term interest rates as well as its dynamics are related to the term premia rather than the expected short-term interest rate. With this, we report that the term premia is driven primarily by nominal uncertainty, i.e. the uncertainty for expected inflation two years ahead and the US term premia.
    Date: 2015–02
  22. By: Mester, Loretta J. (Federal Reserve Bank of Cleveland)
    Abstract: GIC Central Banking Series: New Policies for the Post-Crisis Era, Banque de France, Paris, France, March 23, 2015 Good morning. It is a privilege to join you at this event organized by the Global Interdependence Center and the Banque de France. I am proud to say that I have had an association with the GIC for many years. I have always valued the insights I’ve gleaned from attending GIC events, and I am very grateful that David Kotok, John Silvia, and their colleagues have invited me to participate in today’s program, which is part of the GIC’s Central Banking Series.
    Date: 2015–03–30
  23. By: Blaise Gnimassoun
    Abstract: This paper analyzes the link between the exchange rate misalignments and the external balance under a pegged currency system focusing on the CFA zone. Having discussed and chosen an appropriate analytical framework, it addresses the issue of model uncertainty regarding the equilibrium exchange rate model before estimating currency misalignments. The results show that misalignments have a negative and asymmetric impact on the current account. While overvaluation of the CFA franc deteriorates the current account in the CFA zone, undervaluation does not improve it. Finally, our results highlight that the export concentration tends to exacerbate the overall negative impact of currency misalignments on the external balance. Thus, greater economic diversification is needed in an environment in which countries face both uncertainty in the terms of trade and uncertainty in the nominal exchange rate to conduct a proactive exchange rate policy.
    Keywords: Currency peg, Exchange rate misalignments, Current account, concentration of exports, Bayesian model averaging.
    JEL: F31 F32 C11
    Date: 2015
  24. By: Kubo, Koji
    Abstract: We address the puzzle why the black market for foreign exchange thrives in Myanmar despite the successful unification of multiple exchange rates. A closer look at the black market reveals that its enduring competitiveness stems from its lower transaction costs. A question arising from this observation is how the official market, namely banks, can compete with and replace the black market. Our empirical analysis based on an original questionnaire survey of private export firms regarding their choices of currency trading modes suggests that banks can attract exporters by exploiting the economies of scope between currency trading and lending.
    Keywords: Myanmar, Foreign exchange, Banks, Informal finance, Exports, Exchange rate unification, Black market for foreign exchange, Economies of scope in banking
    JEL: E26 O24 O53
    Date: 5015–03
  25. By: Yoshino, Naoyuki (Asian Development Bank Institute); Kaji, Sahoko (Asian Development Bank Institute); Asonuma, Tamon (Asian Development Bank Institute)
    Abstract: This paper discusses adjustments of capital account restrictions and exchange rate regimes in East Asia. Monetary authorities have two options for these adjustments: gradual adjustments or rapid adjustments. We analyze the costs and benefits for both adjustment options in each area, i.e., capital account restrictions and exchange rate regime. The paper provides prominent country cases for each adjustment option to emphasize the benefits for policymakers. We then propose four transition policy options for East Asian countries aiming to relax capital account restrictions and increase flexibility in exchange rates from fixed regimes with capital account controls.
    Keywords: exchange rate transition; east asia; capital account controls; exchange rate transition policies
    JEL: F33 F41 F42
    Date: 2015–04–03
  26. By: Mester, Loretta J. (Federal Reserve Bank of Cleveland)
    Abstract: Good morning. I am very pleased to participate in this conference co-organized by the Federal Reserve Bank of Cleveland and the Office of Financial Research. I want to thank Stephen Ong and Joe Haubrich from the Cleveland Fed and Mark Flood and Greg Feldberg from the OFR for putting together such an interesting program. I also thank the editors of the Journal of Financial Stability, which will be publishing a special volume of the journal with some of the papers from the conference. This is the second in what I hope is a series of conferences co-sponsored by the Cleveland Fed and the OFR. I very much value the collaboration between our institutions, which share a similar mission of fostering financial stability in our nation. I believe avenues such as this conference, which bring together researchers, financial sector supervisors, and policymakers from around the globe, provide important ways for us to share different perspectives on the complex subject of financial stability. This dialogue can lead to a better understanding of what we know and what we still need to learn, a crucial step on the road to more effective policymaking.
    Date: 2015–03–30
  27. By: Daniel Gersten Reiss
    Abstract: This article for the first time uses Brazilian trade data to draw conclusions about the invoice currency choice—both in general and as it pertains to the Brazilian real (BRL). We find that the Brazil-Argentina policy of providing payment orders associated to an exchange transaction between their currencies has had a significant impact on the currency chosen for invoicing, establishing a link between the availability of financial instruments and the invoice currency choice. Moreover, the evidence does not confirm some previous international results. We identify that in Brazil there is no coincidence regarding the use of BRL for invoicing and its use for making payments. Yet we find that the main exports denominated in BRL are homogenous goods—sugar and tobacco—suggesting that some bargaining power might remain even if goods are traded in international markets. From the BRL-specific perspective, we categorically move away from the idea that the BRL is not used in Brazilian international trade. Although it is used at a limited absolute volume, an exceptional ninefold growth between 2007 and 2011 is observed. New intriguing questions about Brazilian currency usage can therefore be proposed
    Date: 2015–03
  28. By: Muqtada, Muhammed
    Abstract: This study is inspired by the current debate on whether central banks, especially in the developing world, should pursue a single mandate or dual/multiple mandates. It examines the Bangladesh Bank’s (BB) aspiration to adopt a multiple mandates approach. These include, besides the objective of price stability, the promotion of “output, employment and real income”. In recent years, the BB has widened its developmental role to play its part in the national strategy of “inclusive growth”, and is seeking to model itself as a developmental central bank. According to an ILO content-analysis study of objectives and missions of central banks, Bangladesh is cited among the very few countries where the central bank has an explicit development objective.
    Keywords: economic reform, bank, monetary policy, price stabilization, employment security, Bangladesh, réforme économique, banque, politique monétaire, stabilisation des prix, sécurité de l'emploi, Bangladesh, reforma económica, banco, política monetaria, estabilización de los precios, seguridad en el empleo, Bangladesh
    Date: 2015
  29. By: Carlos Madeira; Joao Madeira
    Abstract: We find that communication of the votes of FOMC members affects stock returns around the days of announcements. Since votes have been made public through press statements in 2002, stock markets gain value when votes are unanimous but lose value when dissent occurs. This pattern extends to US firm-size and industry portfolios and major international equity indexes. We reject differences in risk, trading volume, expectations of future monetary policy and other coincident events as the likely explanations for the phenomenon. We conclude that the cause lies in dissent votes leading to pessimistic changes in the expectations of the macroeconomic outlook
    Date: 2015–02

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