Found 59 article(s) for author 'Gita Gopinath'

BCL – TSE Conference “The Future of the international monetary system”

BCL – TSE Conference “The Future of the international monetary system”. Gita Gopinath, September 17, 2019, Video, “Organized in Luxembourg 17 September 2019, – Introductory remarks by Mr. Gaston Reinesch, Governor of the Banque centrale du Luxembourg – Lecture by Prof. Gita Gopinath (International Monetary Fund)Link

 

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Tariff Passthrough at the Border and at the Store: Evidence from US Trade Policy

Tariff Passthrough at the Border and at the Store: Evidence from US Trade Policy. Alberto Cavallo, Gita Gopinath, May 2019, Paper, “We use data collected at the border and at retailers to characterize the impact of recent changes in US trade policy on importers, consumers, and exporters. We start by studying the tariffs on imports of steel and Chinese goods that were imposed during 2018. We find little difference in the “at-the-dock” ex-tariff price levels and stickiness for otherwise equivalent goods that were affected and not affected. This nearly complete passthrough of tariffs to the total price paid by importers suggests the tariff incidence has fallen largely on the US. We simultaneously estimate exchange rate passthrough and find the response to be far more muted. Next, in-progress analyses of retail prices preliminarily show more heterogeneity, with the higher cost of imports passed through to consumers for some goods, such as washing machines, but absorbed by lower retailer profit margins for others, such as many from China. Finally, in contrast to imports, US exports subjected to retaliatory tariffs exhibited declines in their ex-tariff prices relative to equivalent but non-targeted goods.Link

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Dollar Invoicing and the Heterogeneity of Exchange Rate Pass-Through

Dollar Invoicing and the Heterogeneity of Exchange Rate Pass-Through. Gita Gopinath, 2019, Paper, “The vast majority of international goods trade is invoiced in a dominant currency, which is most often the U.S. dollar (Goldberg and Tille (2008); Gopinath (2015); Casas et al. (2016); Boz, Gopinath and Plagborg-Møller (2017)). Accordingly, the dominant currency paradigm (DCP) bargained transactions the empirically relevant framework for analyzing trade responses to exchange rate fluctuations and international spillovers of monetary policy. The theoretical framework underlying DCP predicts that pass through from exchange rates to prices or quantities should vary across countries, depending on the share of imports invoiced in dollars.Link

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Dollar Dominance in Trade and Finance

Dollar Dominance in Trade and Finance. Gita Gopinath, 2019, Book Chapter, “According to the major paradigm in international macroeconomics, namely the Mundell-Fleming paradigm (Mundell 1963; Fleming 1962), the importance of a country’s currency in international trade is tied closely to its share in world trade. This is because each country is assumed to export its goods in its own currency. That is, if we consider trade among the United States, India, and Japan, the assumption is that all exports from the United States are invoiced in dollars, all exports from Japan are invoiced in yen, and all exports from India are invoiced in rupees. Further, because the paradigm assumes that prices are sticky in the exporter’s currency, exchange rate fluctuations across countries affect their bilateral terms of trade, defined as the ratio of the at-the-dock price of imports to that of exports.Link

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Dollar Dominance in Trade: Facts and Implications

Dollar Dominance in Trade: Facts and Implications. Gita Gopinath, 2019, Opinion, “It is an honor to give the EXIM Bank of India’s 33rd Commencement Day Lecture. I would like to especially thank the Managing Director, Mr. David Rasquinha, for inviting me to speak at this special event.  Given that this is the EXIM Bank lecture it feels appropriate to talk about international trade. The remarkable growth in international trade and finance over the last four decades has changed economics and politics. The global financial crisis over the last decade has challenged several of the existing paradigms in economics. In my lecture today I will speak about one such long-standing paradigm in international economics, the so-called “Mundell-Fleming paradigm,”and the recent evidence that questions the general validity of this framework. This new evidence arises from work I have done over the last decade with co-authors that has led us to push for a new paradigm that we call the “Dominant Currency Paradigm.”Link

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Cash and the Economy: Evidence from India’s Demonetization

Cash and the Economy: Evidence from India’s Demonetization. Gita Gopinath, Gabriel Chodorow-Reich, December 13, 2018, Paper, “We analyze a unique episode in the history of monetary economics, the 2016 Indian “demonetization.” This policy made 86% of cash in circulation illegal tender overnight, with new notes gradually introduced over the next several months. We present a model of demonetization where agents hold cash both to satisfy a cash-in-advance constraint and for tax evasion purposes. We test the predictions of the model in the cross-section of Indian districts using several novel data sets including: a data set containing the geographic distribution of demonetized and new notes for causal inference; nightlights data and employment surveys to measure economic activity including in the informal sector; debit/credit cards and e-wallet transactions data; and banking data on deposit and credit growth. Districts experiencing more severe demonetization had relative reductions in economic activity, faster adoption of alternative payment technologies, and lower bank credit growth. The cross-sectional responses cumulate to a contraction in employment and nightlights-based output due to demonetization of 2 p.p. and of bank credit of 2 p.p. in 2016Q4 relative to their counterfactual paths, effects which dissipate over the next few months. We use our model to show these cumulated effects are a lower bound for the aggregate effects of demonetization. We conclude that unlike in the cashless limit of new-Keynesian models, in modern India cash serves an essential role in facilitating economic activity.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, 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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