Category Archives: international

“Exchange rate models for a new era: Major and emerging market currencies”

That’s the title of a forthcoming special section in the Journal of International Money and Finance. Here’s the introductory article to the special issue [link].

Disruptions to financial markets, elevated risk levels, and unconventional monetary policies pursued by central banks have altered the landscape of international finance. The near zero and negative interest rates in several key advanced economies, for instance, present a new environment for pricing financial assets and shock transmission. The ultra-accommodative policy stance has affected exchange rates via, for instance, its effects on expectations, capital flows and global liquidity. As a result, new challenges in modelling equilibrium exchange rates, assessing exchange rate misalignment, and evaluating their roles in re-balancing external imbalances, and shock transmission have arisen. Against this backdrop, a conference was convened to provide a platform for discussing recent advances in modelling exchange rates, from perspectives of both major and emerging market currencies. This special issue of the Journal of International Money and Finance consists of eight papers presented at a conference organized by Global Research Unit at Department of Economics and Finance, City University of Hong Kong, Bank for International Settlements, Asian Office, and Centre for Economic Policy Research, with advice from Nelson Mark, and held at City University of Hong Kong, May 18–19, 2017. The topics covered advances in empirical exchange rate modeling, the effect of news, risk and uncertainty on currency values, order flow and exchange rates, monetary policy and interest rate parity, and the behavior of the Renminbi duringthe post-crisis. We describe below the main take-aways from these papers. …

The entire article is here (ungated for 50 days). special issue [link]. Published online: Adler, Lama & Medina, Berg & Mark,  Cao, Huang, Liu & MacDonald, Cheung, Chinn, Garcia Pascual & Zhang (ungated for 50 days), Cheung, Fatum & Yamamoto, Engel, Lee, Liu, Liu & Wu, Krohn & Moore, and McCauley & Shu.

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When the Textbook Is Right: Implications of the Trump Fiscal/Trade Regime

Today we learned that through March, the Federal budget deficit was 15% larger than the corresponding point in the last fiscal year — as expected given a not particularly stimulative tax cut (so much for tax cuts paying for themselves, as Stephen Moore claimed) and the ending of spending restraints. The dollar remains at elevated levels, as interest rates have risen. The trade deficit, excluding petroleum, continues to deteriorate. As I explained to my macro class today… it’s all textbook (notes).

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Guest Contribution: “Global Growth Forecasts Shift Downward—What’s Behind the Numbers and Why It Matters”

Today, we are pleased to present a guest contribution written by Enrique Martínez-García (Senior Reserach Economist and Policy Advisor, Federal Reserve Bank of Dallas). The views expressed here are those solely of the author and do not reflect those of the Federal Reserve Bank of Dallas or the Federal Reserve System. He acknowledges the contributions of Valerie Grossman, Michael Morris, Amro Shohoud, and Mark A. Wynne in preparing these comments.

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