Found 385 article(s) in category 'Monetary Policy'

Global Currency Hedging

Global Currency Hedging. John Campbell, January 28, 2009, Paper. “Over the period 1975 to 2005, the US dollar (particularly in relation to the Canadian dollar) and the euro and Swiss franc (particularly in the second half of the period) have moved against world equity markets. Thus these currencies should be attractive to risk-minimizing global equity investors despite their low average returns. The risk-minimizing currency strategy for a global bond investor is close to a full currency hedge, with a modest long position in the US dollar. There is little evidence that risk-minimizing investors should adjust their currency...” Link

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Exchange Rate Volatility and Productivity Growth: The Role of Financial Development

Exchange Rate Volatility and Productivity Growth: The Role of Financial Development. Philippe Aghion, Kenneth Rogoff, 2009, Paper. “This paper offers empirical evidence that real exchange rate volatility can have a significant impact on long-term rate of productivity growth, but the effect depends critically on a country’s level of financial development. For countries with relatively low levels of financial development, exchange rate volatility generally reduces growth, whereas for financially advanced countries, there is no significant effect. Our empirical analysis is based on an 83 country data set spanning the years 1960-2000…”  Link

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Comment: Policymaking Insights from Behavioral Economics

Comment: Policymaking Insights from Behavioral Economics. David Laibson, 2009, Opinion. “Annamaria Lusardi’s paper is a wonderful summary of what is known about financial literacy and financial decisionmaking. I strongly recommend that anyone who is thinking about household savings behavior or savings policy read her paper. It emphasizes the recent findings that Lusardi and her coauthors have generated: financial illiteracy is an important contributor to suboptimal investment choicesMy comments cover four topics. First, I discuss the classical economic argument that economic choices might be sophisticated…” Link

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Investment Cycles and Sovereign Debt Overhang

Investment Cycles and Sovereign Debt Overhang. Aguiar, Mark, Manuel Amador, and Gita Gopinath, 2009, Paper. “We characterize optimal taxation of foreign capital and optimal sovereign debt policy in a small open economy where the government cannot commit to policy, seeks to insure a risk-averse domestic constituency, and is more impatient than the market. Optimal policy generates long-run cycles in both sovereign debt and foreign direct investment in an environment in which the first best capital stock is a constant. The expected tax on capital endogenously varies with the state of the economy, and investment is distorted…” Link

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The Euro and Structural Reforms

The Euro and Structural Reforms. Alberto Alesina, November 2008, Paper. “This paper investigates whether or not the adoption of the Euro has facilitated the introduction of structural reforms, defined as deregulation in the product markets and liberalization and deregulation in the labor markets. After reviewing the theoretical arguments that may link the adoption of the Euro and structural reforms, we investigate the empirical evidence. We find that the adoption of the Euro has been associated with an acceleration of the pace of structural reforms in the product market…” Link

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Financial Constraints and Growth: Multinational and Local Firm Responses to Currency Crises

Financial Constraints and Growth: Multinational and Local Firm Responses to Currency Crises. Mihir A. Desai, C. Fritz Foley, November 2008. “This paper examines how financial constraints and product market exposures determine the response of multinational and local firms to sharp depreciations. U.S. multinational affiliates increase sales, assets, and investment significantly more than local firms during, and subsequent to, depreciations. Differing product market exposures do not explain these differences in performance. Instead, a differential ability to circumvent financial constraints is a significant determinant…” Link

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Can Exchange Rates Forecast Commodity Prices?

Can Exchange Rates Forecast Commodity Prices? Kenneth Rogoff, June 29, 2008, Paper. “We show that “commodity currency” exchange rates have remarkably robust power in predicting global commodity prices, both in-sample and out-of-sample, and against a variety of alternative benchmarks. This result is of particular interest to policymakers, given the lack of deep forward markets in many individual commodities, and broad aggregate commodity indices in particular. We also explore the reverse relationship (commodity prices forecasting exchange rates) but Önd it to be notably less robust…” Link

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A Gap-Filling Theory of Corporate Debt Maturity Choice

A Gap-Filling Theory of Corporate Debt Maturity Choice. Jeremy Stein, Robin Greenwood, Samuel Hanson, June 2008, Paper. “We argue that time-series variation in the maturity of aggregate corporate debt issues arises because firms behave as macro liquidity providers, absorbing the large supply shocks associated with changes in the maturity structure of government debt. We document that when the government funds itself with relatively more short-term debt, firms fill the resulting gap by issuing more long-term debt, and vice-versa. This type of liquidity provision is undertaken more aggressively: i) in periods when the ratio…” Link

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Productivity Growth and Countercyclical Budgetary Policy: What Do We Learn from OECD Panel Data?

Productivity Growth and Countercyclical Budgetary Policy: What Do We Learn from OECD Panel Data? Philippe Aghion, June 2008, Paper. “A common view among macroeconomists is that there is a decoupling between macroeconomic policy (e.g., budget deficit, taxation, money supply), which should primarily affect price and income stability and long-run economic growth, which, if anything, should depend only upon structural characteristics of the economy (property right enforcement, market structure, market mobility, and so forth). That macroeconomic policy should not be a key determinant of growth…” Link

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Taxation, Efficiency, and Economic Growth

Taxation, Efficiency, and Economic Growth. Dale Jorgenson, Mun Ho, May 9, 2008, Book Chapter. “In this paper we model U.S. labor supply and demand over the next 25 years. Despite the anticipated aging of the population, moderate population growth will provide growing supplies of labor well into the 21st century. Improvements in labor quality due to greater education and experience will also continue for some time, but will eventually disappear. Productivity growth for the U.S. economy will be below long-term historical averages, but labor-using technical change will be a stimulus to the growth of labor demand. Year to-year changes in economic...” Link

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