Found 50 article(s) for author 'Gita Gopinath'

Trade Invoicing, Bank Funding, and Central Bank Reserve Holdings

Trade Invoicing, Bank Funding, and Central Bank Reserve Holdings. Gita Gopinath, Jeremy Stein, May 2018, Paper, “We develop a model that shows how the currency denomination of a country’s imports influences the funding structure of its banking system, and in turn, the currency composition of its central bank’s reserve holdings. The link between the dollar’s role in bank funding and its role as a central bank reserve currency is stronger when the country’s fiscal capacity is limited, and when exchange rates are volatile. In the data, there is a pronounced cross-country relationship between the fraction of imports that are dollar invoiced, and the fraction of central-bank foreign-exchange reserves that are held in dollars.Link

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China’s strong retaliation to Trump’s tariffs could trigger global trade war

China’s strong retaliation to Trump’s tariffs could trigger global trade war. Gita Gopinath, March 24, 2018, Video, “President Donald Trump’s decision to impose tariffs is worrying — that’s the word coming in from Economics Professor at Harvard and Financial Advisor to Kerala Government, Gita Gopinath. Speaking exclusively to Shereen Bhan, Gita said that we may be at the brink of a trade war if China strongly retaliates against Trump’s decision. She added that India will also be affected with this tariff imposition in long term.Link

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Trade Invoicing, Bank Funding, and Central Bank Reserve Holdings

Trade Invoicing, Bank Funding, and Central Bank Reserve Holdings. Gita Gopinath, Jeremy Stein, 2018, Paper, “In recent work (Gopinath and Stein (2017)) we explore how a currency like the dollar can become entrenched as a dominant global currency, focusing on the two-way feedback between trade invoicing and banking structure. The basic idea is that when a larger share of a country’s imports are invoiced in dollars, its citizens have a greater demand for dollar-denominated safe claims.Link

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Banking, Trade, and the Making of a Dominant Currency

Banking, Trade, and the Making of a Dominant Currency. Gita Gopinath, Jeremy Stein, November 11, 2017, Paper, “We explore the interplay between trade invoicing patterns and the pricing of safe assets in different currencies. Our theory highlights the following points: 1) a currency’s role as a unit of account for invoicing decisions is complementary to its role as a safe store of value; 2) this complementarity can lead to the emergence of a single dominant currency in trade invoicing and global banking, even when multiple large candidate countries share similar economic fundamentals; 3) firms in emerging-market countries endogenously take on currency mismatches by borrowing in the dominant currency; 4) the expected return on dominantcurrency safe assets is lower than that on similarly safe assets denominated in other currencies, thereby bestowing an “exorbitant privilege” on the dominant currency. the theory thus provides a unified explanation for why a dominant currency is so heavily used in both trade invoicing and in global finance.Link

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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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The Reallocation Myth

The Reallocation Myth. Gita Gopinath, September 8, 2017, Paper, “This is a very interesting and provocative paper on an important topic. Growth in advanced economies of the world have settled into a tepid pace of 1%-2% a year associated with a decline in total factor and labor productivity over the past decade. It is imperative to understand the sources of low productivity growth and to evaluate what policies can rejuvenate growth. The potential growth rate of the economy has implications for measures of output gaps and real rates and therefore has implications for monetary policy. Chang-Tai and Pete in their ambitious paper take up this challenging task for the U.S. economy.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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