Found 44 article(s) for author 'Gita Gopinath'

Global Trade and the Dollar

Global Trade and the Dollar. Gita Gopinath, November 2017, Paper, “We document that the U.S. dollar exchange rate drives global trade prices and volumes. Using a newly constructed data set of bilateral price and volume indices for more than 2,500 country pairs, we establish the following facts: 1) the dollar exchange rate quantitatively dominates the bilateral exchange rate in price pass-through and trade elasticity regressions. U.S. monetary policy induced dollar fluctuations have high pass-through into bilateral import prices. 2) Bilateral noncommodities terms of trade are essentially uncorrelated with bilateral exchange rates. 3) Œe strength of the U.S. dollar is a key predictor of rest-of-world aggregate trade volume and consumer/producer price inflation.” Link

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Rethinking Macroeconomic Policy: International Economy Issues

Rethinking Macroeconomic Policy: International Economy Issues. Gita Gopinath, October 10, 2017, Paper, “In this paper I make the following ten remarks on the topics of exchange rate policy, capital flow management, protectionism, and global cooperation: 1) The gains to exchange rate flexibility are worse than you think; 2) The ‘Trilemma’ lives on; 3) The U.S. dollar exchange rate drives global trade prices and volumes; 4) Gross capital flows matter as much as net flows, and global banks have internationalized U.S. monetary policy. 5) Emerging markets tilt away from foreign currency to local currency debt reduces their exposure to global risk factors; 6) Low interest rate environments can lead to misallocation of resources and lower productivity; 7) The relationship between global imbalances, reserve accumulation, and currency manipulation is not well identified. 8) Uniform border taxes are not neutral; 9) Trade is not the main driver of earnings inequality, but at the same time policy has failed to address its redistributive consequences. 10) Global coordination of financial regulation is essential alongside country level macroprudential polices. Reserve accumulation and currency swap lines do not substitute for the lender of last resort role of the IMF.” Link

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Gita Gopinath’s Advice To RBI: ‘Be More Transparent’

Gita Gopinath’s Advice To RBI: ‘Be More Transparent’. Gita Gopinath, January 6, 2017, Video, “On NDTV’s Walk The Talk, Economics Professor at Harvard University and Financial Advisor to the Kerala Chief Minister Gita Gopinath says she’s a bit puzzled about why an institution like the RBI which is driven by data was giving out data post demonetisation. She adds RBI should have been more transparent about data. She says she feels that notes ban was a great move by the government and will benefit India in the long run, however she feels the implementation could have been better planned and gradual. She says “getting rid of 86% of the currency in circulation is unprecedented, not just in practice but also in theory”.Link

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Trump’s Tax Plan and the Dollar

Trump’s Tax Plan and the Dollar. Emmanuel Farhi, Gita Gopinath, January 3, 2017, Opinion, “Now that Donald Trump has been elected President of the United States and Republicans control both houses of Congress, corporate tax reform is coming to America. The package currently being discussed includes two important features: a cut in the tax rate, from 35% currently to 20% or even 15%; and a “border-adjustment” tax, which is typical of a value-added-tax (VAT) regime, but unusual for corporate taxes.Link

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Assessing Impact Of Demonetisation Remains A Moving Target

Assessing Impact Of Demonetisation Remains A Moving Target. Gita Gopinath, December 23, 2016, Video, “India’s experiment with demonetisation, the largest such exercise ever undertaken, has caught the attention of global economists. From former U.S. Treasury Secretary Larry Summers, who raised questions about how successful the move will be in curbing corruption, to Harvard Professor Kenneth Rogoff, who advised emerging economies not to ‘try this at home.’Link

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Dominant Currency Paradigm

Dominant Currency Paradigm. Gita Gopinath, December 2016, Paper, “Most trade is invoiced in very few currencies. Despite this, the Mundell-Fleming benchmark and its variants focus on pricing in the producer’s currency or in local currency. We model instead a ‘dominant currency paradigm’ for small open economies characterized by three features: pricing in a dominant currency; pricing complementarities, and imported input use in production. Under this paradigm: (a) terms of trade are stable; (b) dominant currency exchange rate pass-through into export and import prices is high regardless of destination or origin of goods; (c) exchange rate pass-through of non-dominant currencies is small; (d) expenditure switching occurs mostly via imports and export expansions following depreciations are weak. Using merged firm level and customs data from Colombia we document strong support for the dominant currency paradigm and reject the alternatives of producer currency and local currency pricing.Link

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Demonetization Dos and Don’ts

Demonetization Dos and Don’ts. Gita Gopinath, November 27, 2016, Opinion, “On November 8, at 8:15 in the evening, Indian Prime Minister Narendra Modi’s government announced that, at the stroke of midnight, all 500- and 1,000-rupee notes in circulation would no longer be considered legal tender, and would need to be exchanged for new 500- and 2,000-rupee notes. Modi’s “demonetization” intervention affected 85% of the money in circulation in India. It was an unprecedented move, whether in India or almost anywhere else, and it is by far Modi’s boldest policy intervention to date.Link

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India’s Economy after Rajan

India’s Economy after Rajan. Gita Gopinath, June 22, 2016, Opinion. “Raghuram Rajan’s decision not to seek a second term as Governor of the Reserve Bank of India (RBI, India’s central bank) was met with shock from those of us who have been cheering on the Indian economy. While it is no secret that Prime Minister Narendra Modi’s government had its problems with Rajan, few believed that the government would take a step that so clearly undermines India’s interests.” Link

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Dollar Pricing Redux

Dollar Pricing Redux. Gita Gopinath, June 13, 2016, Paper, “A country’s exchange rate is at the center of economic and political debates on currency wars and trade competitiveness. The real consequences of exchange rate fluctuations depend critically on how firms set prices in international markets. Recent empirical evidence has challenged the dominant ‘producer currency’ pricing and ‘local currency’ pricing paradigms in the literature. In this paper we propose a new paradigm, consistent with the empirical evidence and characterized by three features: pricing in dollars, strategic complementarity in pricing and imported inputs in production. We call this the ‘dollar pricing’ paradigm and contrast its theoretical predictions with prior approaches in a general equilibrium New Keynesian model. We then employ novel data for Colombia to evaluate the implications of exchange rate fluctuations associated with commodity price shocks and show that the findings strongly support the dollar pricing paradigm.Link

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