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1 – 10 of 292We investigate fluctuations in the nominal effective exchange rates (NEERs) of East Asian currencies and the Asian monetary unit (AMU), which is computed as a weighted average of…
Abstract
We investigate fluctuations in the nominal effective exchange rates (NEERs) of East Asian currencies and the Asian monetary unit (AMU), which is computed as a weighted average of East Asian currencies during the global financial crisis. We find that NEERs were more stable for countries that continued to follow a currency basket system during the global financial crisis.
Furthermore, we investigate the relationships among NEERs, AMU, and AMU deviation indicators, which indicate the extent of the deviation in the exchange rate of each East Asian currency from a benchmark rate given in terms of the AMU. By comparing NEERs with a combination of AMU and AMU deviation indicators, we find that there is a strong relationship between them, both before and after the global financial crisis. These results indicate that a coordinated exchange rate policy aimed at stabilizing the AMU deviation indicators will be effective in stabilizing the NEERs of East Asian currencies. In this respect, the AMU deviation indicators, which indicate intraregional exchange rates among East Asian currencies, play a crucial role.
Because NEER trade weights are widely similar among East Asian currencies, a policy aimed at stabilizing a home currency against its NEER may lead to a coordinated exchange rate policy without a common consensus among East Asian countries. In the future, however, coordinated monetary policies should be considered along with coordinated exchange rate policies.
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Keywords
- Asian monetary unit (AMU)
- AMU deviation indicator
- de facto US dollar peg system
- currency basket system
- nominal effective exchange rate (NEER)
- coordinated exchange rate policy
- the Chiang Mai Initiative
- trade weight
- GDP measured at PPP
- European currency unit (ECU)
- implicit basket weights
- currency regime
- surveillance
- European monetary system (EMS)
Guonan Ma and Robert N McCauley
The renminbi (RMB) has evolved in four phases since its mid-2005 unpegging from the US dollar. After a year's transition, the RMB's effective exchange rate traded for two years…
Abstract
The renminbi (RMB) has evolved in four phases since its mid-2005 unpegging from the US dollar. After a year's transition, the RMB's effective exchange rate traded for two years within narrow bands around an appreciating trend. That is, the RMB behaved as if it were managed to strengthen gradually against trading partners’ currencies. This experiment was interrupted in mid-2008 and the RMB stabilized against a strong dollar amidst the global financial crisis. If Chinese policy were to return to effective currency stability and other East Asian countries were to pursue similar policies, regional currency stability would be enhanced. That would create more favorable conditions for an evolution towards monetary cooperation.
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This chapter examines exchange rate options for East Asian countries, taking into account their real economic linkages as well as their international financial relations…
Abstract
This chapter examines exchange rate options for East Asian countries, taking into account their real economic linkages as well as their international financial relations. Particular consideration is given to possible exchange rate cooperation within the region. For this purpose, the literature on the optimal peg is reconsidered and subsequently extended to include a country's international financial asset and liability situation. That is, instead of focusing solely on nominal or real effective exchange rates, the chapter proposes a blend of “real” and “financial” exchange rates for analyzing “optimal” exchange rate policy.
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Facts vs Fantasies about the ECU. Advantages frequently ascribed to the ECU include the following:
This paper examines commonly used property price indices in several Commonwealth countries. It finds that many of the measures may be flawed owing to two issues relating to the…
Abstract
This paper examines commonly used property price indices in several Commonwealth countries. It finds that many of the measures may be flawed owing to two issues relating to the index construction methodology: the quality change problem and the choice of an index number algorithm. Using data that comprises the universe of transactions for the Singapore residential market, alternative indices based on more rigourous estimation models are constructed that aim to mitigate these problems. When compared to the official benchmark indices, deviations in time series price behaviour are evident particularly for short‐run dynamics. A key implication of the results is the importance of explicitly recognizing the biases that can arise from using extant indices. Otherwise, a reliance on flawed index signals for decision‐making may result in distorted allocations.
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The field of socially responsible investment (SRI) has become a central theme in the mutual funds industry. The risk implications associated with this investment approach are less…
Abstract
Purpose
The field of socially responsible investment (SRI) has become a central theme in the mutual funds industry. The risk implications associated with this investment approach are less explored. This study further investigates the real contribution to the investor offered by the SRI alternative.The aim of this paper is to throw more light on this debate.
Design/methodology/approach
Analyzing a large sample of US companies, this study investigates the tendency to generate risk when the portfolio is built, taking into account SRI. The research is based on the backtest of the real performance obtainable by adopting different investment strategies in which the red line is the selection method based on the principles of corporate social responsibility.
Findings
The investor must pay a cost that depends on the degree of rigor in the selection criteria. The risk associated with SRI is influenced by the measure adopted. SRI has a better asymmetric risk behavior than other securities. The results suggest using different selection models according to the investor’s objectives. When the objective is to maximize the average return and the remuneration risk, the SRI selection model should be negative or at least as inclusive as possible. In the event that the investor’s objective is to contain risk indices, a restrictive approach to the selection of investments is advisable.
Originality/value
Academic research has long been investigating the ability to generate profits but often neglects the levels of risk implicit in such investment approaches. The originality of this research consists in the adoption of a model based on the continuous optimization of the portfolio. This approach allows the results to be assessed by the returns actually obtained.
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Vivek Moorthy and Shrikant Kolhar
The purpose of this paper is to analyse the implications of sharply rising food prices for monetary policy in India and similar emerging economies at present.
Abstract
Purpose
The purpose of this paper is to analyse the implications of sharply rising food prices for monetary policy in India and similar emerging economies at present.
Design/methodology/approach
This paper uses analytical arguments from relevant macroeconomic literature and evidence from late 1960s US data to examine whether the 1970s stagflation was due to the OPEC price hike. It develops a two person (rich and poor), two commodity (food and non‐food) model to examine the impact of rising food prices on GDP, on measures of inflation, and on welfare, in the model.
Findings
Previously neglected evidence indicates that stagflation (simultaneously rising unemployment and inflation) preceded the OPEC price hike. The model results indicate that when food prices rise, the GDP deflator falls relative to the consumer price index (CPI).
Research limitations/implications
The impact of supply shocks should be investigated by carefully examining links between abnormal rainfall and weather and output and prices on commodity by commodity basis. Further, technical issues pertaining to construction of a composite CPI representative of the population need to be explored.
Practical implications
Monetary policy in India (and similar emerging economies) should focus upon a population weighted CPI or some variant thereof.
Social implications
High GDP growth should not lead to complacency, since when food prices are rising, the overall welfare impact may be negative.
Originality/value
The model presented in this paper explains the sustained divergence in India, in recent years, between the CPI versus the GDP deflator measures of inflation. It also highlights a possible similar divergence between GDP and overall welfare.
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Aims to measure the development and performance of a sensor‐augmented industrial robotic system for handling steel bearing races in an unstructured environment.
Abstract
Purpose
Aims to measure the development and performance of a sensor‐augmented industrial robotic system for handling steel bearing races in an unstructured environment.
Design/methodology/approach
Performs exhaustive experimentation during installation of the robotic system to assess its performance capability in terms of average lifting capacity and cycle time of operation.
Findings
Reveals that improvement can be achieved without damping, though rubber padding still appears to be useful sometimes in higher speed operations. Also unloading operations appear to cause more trouble than loading.
Practical implications
The introduction of the robotic system will culminate in lower cycle time, increased productivity and optimal utilization of the annealing furnace.
Originality/value
Will be beneficial for those involved in material handling operations in an unstructured environment as opposed to more familiar conditions.
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Zoltán Pápai, Péter Nagy and Aliz McLean
This study aims to estimate the quality-adjusted changes in residential mobile consumer prices by controlling for the changes in the relevant service characteristics and quality…
Abstract
Purpose
This study aims to estimate the quality-adjusted changes in residential mobile consumer prices by controlling for the changes in the relevant service characteristics and quality, in a case study on Hungary between 2015 and 2021; compare the results with changes measured by the traditionally calculated official telecommunications price index of the Statistical Office; and discuss separating the hedonic price changes from the effect of a specific government intervention that occurred in Hungary, namely, the significant reduction in the value added tax rate (VAT) levied on internet services.
Design/methodology/approach
Since the price of commercial mobile offers does not directly reflect the continuous improvements in service characteristics and functionalities over time, the price changes need to be adjusted for changes in quality. The authors use hedonic regression analysis to address this issue.
Findings
The results show significant hedonic price changes over the observed seven-year period of over 30%, which turns out to be primarily driven by the significant developments in the comprising service characteristics and not the VAT policy change.
Originality/value
This paper contributes to the literature on hedonic price analyses on complex telecommunications service plans and enhances this methodology by using weights and analysing the content-related features of the mobile packages.
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