Search results

1 – 10 of over 31000
To view the access options for this content please click here
Article

Anthony Clunies Ross

The assignment of targets to instruments in developing countries cannot satisfactorily follow any simple universal rule. Which approach is appropriate is influenced by…

Abstract

The assignment of targets to instruments in developing countries cannot satisfactorily follow any simple universal rule. Which approach is appropriate is influenced by whether the economy is dominated by primary exports, by the importance of the domestic bond market and bank credit, by the extent of existing restriction in foreign exchange and financial markets, by the presence or absence of persistent high inflation, and by the existence or non‐existence of an active international market in the country's currency. Eighteen observations and maxims on stabilisation policy are tentatively drawn (pp. 64–8) from the material reviewed, and the maxims are partly summarised (pp. 69–71) in a schematic assignment, with variations, of targets to instruments.

Details

Journal of Economic Studies, vol. 15 no. 2
Type: Research Article
ISSN: 0144-3585

Keywords

To view the access options for this content please click here
Book part

Rajmund Mirdala and Júlia Ďurčová

Asynchronous current account trends between North and South of the Euro Area were accompanied by significant appreciations of real exchange rate originating in the strong…

Abstract

Asynchronous current account trends between North and South of the Euro Area were accompanied by significant appreciations of real exchange rate originating in the strong shifts in consumer prices and unit labor costs in the periphery economies relative to the core countries of the Euro Area. The issue is whether the real exchange rate is a significant driver of persisting current account imbalances in the Euro Area considering that, according to some authors, differences in domestic demand are more important than is often realized. In the paper we examine relative importance of real exchange rate and demand shocks according to the current account adjustments in the Euro Area member countries. Our results indicate that while the prices and costs related determinants of external competitiveness affected current account adjustments primarily during the pre-crisis period, demand drivers shaped current account balances mainly during the crisis period.

Details

Economic Imbalances and Institutional Changes to the Euro and the European Union
Type: Book
ISBN: 978-1-78714-510-8

Keywords

To view the access options for this content please click here
Article

Hock Tsen Wong

The purpose of this paper is to examine the impact of real exchange rate misalignment on economy and economic sectors, namely construction, manufacturing and mining and…

Abstract

Purpose

The purpose of this paper is to examine the impact of real exchange rate misalignment on economy and economic sectors, namely construction, manufacturing and mining and quarrying in Malaysia.

Design/methodology/approach

The equilibrium real exchange rate and economic models are estimated using the autoregressive distributed lag approach.

Findings

An increase in productivity differential or reserve differential will lead to an appreciation of real exchange rate in the long run. An increase in positive (negative) real exchange rate misalignment will lead to an increase (decrease) in economy. An increase in long-run real exchange rate misalignment will lead to a decrease in economy. Real exchange rate misalignment or long-run real exchange rate misalignment can influence the manufacturing sector in Malaysia. More specifically, undervaluation will promote whereas overvaluation will hurt the manufacturing sector.

Originality/value

Real exchange rate misalignment can be a policy to influence economy but may not be the best choice.

Details

Journal of Economic Studies, vol. 46 no. 1
Type: Research Article
ISSN: 0144-3585

Keywords

To view the access options for this content please click here
Article

Magda Kandil and Nazire Nergiz Dincer

The paper aims to examine the effects of exchange rate fluctuations on real output, the price level, and the real value of components of aggregate demand in Egypt and Turkey.

Abstract

Purpose

The paper aims to examine the effects of exchange rate fluctuations on real output, the price level, and the real value of components of aggregate demand in Egypt and Turkey.

Design/methodology/approach

Building on a theoretical model that decomposes movements in the exchange rate into anticipated and unanticipated components, the empirical investigation traces the effects through demand and supply channels.

Findings

In Turkey, anticipated exchange rate appreciation has significant adverse effects, contracting the growth of real output and the demand for investment and exports, while raising price inflation. Random fluctuations in Turkey have asymmetric effects that highlight the importance of unanticipated depreciation in shrinking output growth and the growth of private consumption and investment, despite an increase in export growth. In Egypt, anticipated exchange rate appreciation decreases export growth. Given asymmetry, the net effect of unanticipated exchange rate fluctuations, in Egypt, decreases real output and consumption growth and increases export growth, on average, over time.

Research limitations/implications

In light of the country‐specific evidence, future research should extend the investigation using panel estimation, incorporating various demand and supply shocks along with exchange rate fluctuations, to establish the relative importance of various shocks on macroeconomic performance across MENA countries.

Practical implications

While adhering to a flexible exchange rate policy to boost competitiveness, managing fundamentals to reduce excessive volatility impinging on the economic system over time should top the policy agenda.

Originality/value

Excessive volatility in the real effective exchange rate could be detrimental to real growth, over time, as the evidence for Turkey and Egypt illustrates.

Details

International Journal of Development Issues, vol. 7 no. 2
Type: Research Article
ISSN: 1446-8956

Keywords

To view the access options for this content please click here
Article

J. Zambujal‐Oliveira and Miguel Faria e Castro

The observed real exchange rate, measured as an effective index of real labour costs, may serve as a base for the evaluation of the Portuguese economy's competitiveness…

Abstract

Purpose

The observed real exchange rate, measured as an effective index of real labour costs, may serve as a base for the evaluation of the Portuguese economy's competitiveness. The purpose of this paper is to evaluate the positioning of the real exchange rate, throughout time, against a benchmark that guarantees external macroeconomic equilibrium (balanced fundamental account).

Design/methodology/approach

This paper uses the effective real exchange rate as an indicator of Portugal's competitive position in relation to its major trading partners (fundamental equilibrium exchange rate approach using the unit labour costs).

Findings

The authors found evidence that the real exchange rate has been persistently overvalued since the early 1990s. The evolution of this situation, which is harmful for the national economy, does not evidence the return to a path that may ensure external equilibrium for Portugal. The results show evidence of significant overvaluation of the Portuguese real exchange rate when compared to its estimated equilibrium level. In order to achieve a balanced fundamental account and considering a margin of error of 5 per cent, the real exchange rate needs to depreciate between 27.69 and 30.61 per cent.

Originality/value

The relevance of the real effective exchange rate as a macroeconomic indicator arises from its role as a measure of national competitiveness. Computed as a measure of the difference of international prices, adjusted to the same unit of measurement, it represents the relative price of goods between countries, determining where this same price may be higher or lower. According to Krugman and Obstfeld, the manipulation of the real effective exchange rate allows one country to adjust its level of competitiveness against its trading partners.

Details

Studies in Economics and Finance, vol. 28 no. 3
Type: Research Article
ISSN: 1086-7376

Keywords

To view the access options for this content please click here
Article

Magda Kandil

Using data for a sample of advanced and developing countries, this paper aims to study the responses of monetary growth and the growth of government spending to external…

Abstract

Purpose

Using data for a sample of advanced and developing countries, this paper aims to study the responses of monetary growth and the growth of government spending to external spillovers, namely, the growth of exports and imports, movement in the real effective exchange rate and the change in the oil price. The objective is to study movements in domestic policy variables in open economies that are vulnerable to trade and commodity price shocks.

Design/methodology/approach

The analysis evaluates correlations between the responses of the policy variables to external spillovers. Further, the analysis studies the effects of indicators of economic performance on domestic policy responses to various shifts across countries.

Findings

Higher variability of real and nominal growth increases the fiscal policy response to external spillovers with an aim to stem further variability. Monetary policies appear to be more responsive to trend price inflation with an aim to stem further inflationary pressures. Fiscal policy’s reaction to trend price inflation aims at striking a balance between countering potential inflationary pressures, as well as recessionary conditions attributed to the various spillovers.

Originality/value

Overall, the evidence points to the importance of trade and commodity price shifts to the design of domestic policies. Further indicators of economic performance differentiate the degree of policy responses to trade and commodity price developments with a goal to stem inflationary pressures and reduce aggregate uncertainty.

Details

International Journal of Development Issues, vol. 15 no. 3
Type: Research Article
ISSN: 1446-8956

Keywords

To view the access options for this content please click here
Article

Zelealem Yiheyis and Jacob Musila

The purpose of this study is to examine the temporal relationships between inflation and exchange rate changes and their implications for the trade balance in Uganda…

Abstract

Purpose

The purpose of this study is to examine the temporal relationships between inflation and exchange rate changes and their implications for the trade balance in Uganda, which saw persistent trade deficits, rising inflation and disinflation episodes, as well as significant exchange-rate realignments and other liberalization measures over the sample period considered.

Design/methodology/approach

The short-run dynamics of the variables in question and the pattern of their long-run relationships are examined applying the bounds testing approach to cointegration on quarterly data.

Findings

The estimates suggest that, in the long run, a real depreciation leads to an increase in inflation; and that both real depreciation and inflation exert no significant effect on the trade balance. The estimated short-run dynamics suggest a causal relationship between the trade balance and the real exchange rate and between the real exchange rate and inflation, which is also found responsive to developments in the foreign sector. Taken together, the short-run and long-run multipliers seem to provide a weak support for the J-curve effect, while no evidence is found for the presence of the S-curve effect.

Originality/value

The study sheds light on the relationship among real exchange rate, inflation and the trade balance in the context of a small developing economy; it highlights that an improvement in the trade balance requires more than an appropriate exchange rate policy and underscores the importance of other policies in strengthening the external sector of the economy.

Details

International Journal of Development Issues, vol. 17 no. 2
Type: Research Article
ISSN: 1446-8956

Keywords

To view the access options for this content please click here
Article

Hali Edison and Francis Vitek

The purpose of this paper is to assess the level of the real effective exchange rate in Australia and New Zealand.

Abstract

Purpose

The purpose of this paper is to assess the level of the real effective exchange rate in Australia and New Zealand.

Design/methodology/approach

The paper describes three empirical models commonly used to conduct exchange rate assessments and applies them to data for Australia and New Zealand.

Findings

The baseline results using data and medium‐term projections, available as of October 2008, suggest that the Australian and New Zealand dollar were broadly in line with fundamentals, but with a wide variation across models. A battery of sensitivity tests illustrates that altering the underlying assumptions can yield substantially different assessments. The results are particularly sensitive to the choice of assessment horizon, the set of economies included in the sample, medium‐term forecasts, and the exchange rate reference period.

Originality/value

The paper provides an assessment of the exchange rates in Australia and New Zealand.

Details

Journal of Financial Economic Policy, vol. 1 no. 2
Type: Research Article
ISSN: 1757-6385

Keywords

To view the access options for this content please click here
Article

Duncan Hodge

The purpose of this paper is to investigate the empirical relationships between changes in OECD output, commodity prices, the real exchange rate, real money supply, unit…

Abstract

Purpose

The purpose of this paper is to investigate the empirical relationships between changes in OECD output, commodity prices, the real exchange rate, real money supply, unit labour costs and manufacturing in South Africa. In particular, to test a version of the Dutch disease argument that increases in the prices of South Africa’s main commodity exports have had a negative effect on domestic manufacturing against the alternative hypothesis that there is a positive relationship between such changes in commodity prices and domestic manufacturing output.

Design/methodology/approach

Construction of a model including real manufacturing output in South Africa as the dependent variable and the following independent variables: OECD output, an international real metals price index, a real effective exchange rate index, real M3 money supply and manufacturing unit labour costs. The time series sample data comprise 124 quarterly observations for the period 1980-2010. The model equation was tested and estimated using a Johansen cointegration approach.

Findings

The main findings are: OECD output is the single most important determinant of domestic manufacturing output; while the real exchange rate has the predicted negative sign, rising commodity prices are associated with increases rather than decreases in domestic manufacturing and; large increases in unit labour costs since the early 1980s have dragged down manufacturing over the sample period.

Originality/value

The finding of a positive relationship between commodity prices and domestic manufacturing means that the Dutch disease argument must be revised when applied to South Africa. While rising commodity prices may lead to a negative exchange rate effect on manufacturing competitiveness, this is more than offset by the positive growth effects associated with upswings in the commodity price cycle.

Details

African Journal of Economic and Management Studies, vol. 6 no. 4
Type: Research Article
ISSN: 2040-0705

Keywords

To view the access options for this content please click here
Article

Laron Delano Alleyne, Onoh-Obasi Okey and Winston Moore

One of the main factors that can impact the cost of holidays to a particular destination is the exchange rate; exchange rate fluctuations impact the overall price of the…

Abstract

Purpose

One of the main factors that can impact the cost of holidays to a particular destination is the exchange rate; exchange rate fluctuations impact the overall price of the holiday and should be expected to effect tourism demand. This paper aims to scrutinize the volatility of the real effective exchange rate between the source market relative to the holiday destination and tourism demand volatility, where the influence of disaggregated data is noted.

Design/methodology/approach

The study uses multivariate conditional volatility regressions to simulate the time-varying conditional variances of international visitor demand and exchange rates for the relatively mature Caribbean tourist destination of Barbados. Data on the country’s main source markets, the UK, the USA and Canada is used, where the decision to disaggregate the analysis by market allows the authors to contribute to policymaking, particularly the future of tourism marketing.

Findings

The volatility models used in the paper suggests that shocks to total arrivals, as well as the USA and UK markets tend to die out relatively quickly. Asymmetric effects were observed for total arrivals, mainly due to the combination of the different source markets and potential evidence of Butler’s (1980) concept of a tourist area’s cycle of growth. The results also highlight the significance of using disaggregated tourism demand models to simulate volatility, as aggregated models do not adequately capture source market specific shocks, due to the potential model misspecification. Exchange rate volatility is postulated to have resulted in the greater utilization of packaged tours in some markets, while the effects of the market’s online presence moderates the impact of exchange rate volatility on tourist arrivals. Markets should also explore the potential of attracting higher numbers of older tourist, as this group may have higher disposable incomes, thereby mitigating the influence of exchange rate volatility.

Research limitations/implications

Some of the explanatory variables were not available on a high enough frequency and proxies had to be used. However, the approach used was consistent with other papers in the literature.

Practical implications

The results from the paper suggest that the effects of exchange rate volatility in key source markets were offset by non-price factors in some markets and the existence of the exchange rate peg in others. In particular, the online presence of the destination was one of those non-price factors highlighted as being important.

Originality/value

In most theoretical models of tourism demand, disaggregation is not normally considered a significant aspect of the model. This paper contributes to the literature by investigating the impact real effective exchange rate volatility has on tourism demand at a disaggregated source country level. The approach highlights the importance of modeling tourism demand at a disaggregated level and provides important perspective from a mature small island destination.

摘要

设计/方法/方法

该研究采用多元条件波动回归来拟合相对成熟的加勒比海旅游目的地巴巴多斯的国际游客需求和汇率的时变条件方差。本研究逐一分析了该国主要客源市场(英国, 美国和加拿大)的数据, 从而为政策制定, 尤其是对今后的旅游营销做出贡献。

目的

汇率是影响到特定目的地度假成本的主要因素之一。汇率波动会影响整体的度假成本, 并会影响旅游需求。基于按客源地分类的数据, 本文详细研究了客源市场相对于度假目的地的实际有效汇率的波动性以及旅游需求的波动性。

发现

本文使用的波动模型表明, 汇率冲击对入境总人数以及美国和英国市场影响短暂。冲击对总入境人数产生的不对称效应, 主要是由于不同的客源市场加总和巴特勒(1980)关于旅游区增长周期概念所致。本文结论还凸显了使用基于客源地数据的旅游需求模型来模拟波动性的重要性, 因为加总数据不能充分捕获具体客源地市场的冲击从而产生模型设定作物。汇率波动会引起某些市场中团体游客的增加, 而目的地的线上热度影响会调节汇率波动对游客人数的影响。市场还应探索吸引更多老年游客的潜力, 因为该群体的可支配收入可能更高, 从而减轻了汇率波动的影响。

研究局限/意义

由于一些解释变量的数据频率不够高, 本文不得不使用一些替代指标。所使用的方法与文献中的其他论文一致。

实际影响

该论文的结果表明, 在某些客源地市场, 汇率波动的影响会被某非价格因素所抵消, 而在另一些主要客源地市场, 固定汇率的存在刚好规避了汇率波动产生的影响。目的地的线上热度是重要的非价格因素之一。

独创性

在大多数旅游需求理论模型中, 按客源地拆分的数据通常不被视为模型的重要方面。本文的理论贡献则是通过研究实际有效汇率波动对不同客源国的旅游需求的影响强调了旅游需求建模中使用基于客源地数据的重要性, 并以一个成熟的小岛目的地为角度进行了阐述。

Resumen

Propósito

Uno de los principales factores que pueden afectar al costo de las vacaciones a un destino en particular es el tipo de cambio; Las fluctuaciones del tipo de cambio afectan a el precio general de las vacaciones y es normal que afecten a la demanda turística. Este documento analiza la volatilidad del tipo de cambio efectivo real entre el mercado de origen en relación con el destino de vacaciones y la volatilidad de la demanda turística, donde se observa la influencia de los datos desagregados.

Diseño/metodología/enfoque

El estudio emplea regresiones de volatilidad condicional multivariadas para simular las variaciones condicionales variables en el tiempo de la demanda de visitantes internacionales y los tipos de cambio para el destino turístico caribeño relativamente maduro de Barbados. Se emplean datos sobre los principales mercados de origen del país, el Reino Unido, los Estados Unidos de América y Canadá, donde la decisión de desagrerar el análisis por mercado permite a los autores contribuir a la formulación de políticas, en particular al futuro del marketing turístico.

Resultados

Los modelos de volatilidad utilizados en el documento sugieren que los shocks en las llegadas totales, así como en los mercados de los Estados Unidos y el Reino Unido, tienden a desaparecer con relativa rapidez. Se observaron efectos asimétricos para las llegadas totales, principalmente debido a la combinación de los diferentes mercados de origen y la evidencia potencial del concepto de Butler (1980) del ciclo de crecimiento de un área turística. Los resultados también resaltan la importancia de utilizar modelos desagregados de demanda turística para simular la volatilidad, ya que los modelos agregados no capturan adecuadamente los shocks específicos del mercado de origen, debido a la posible especificación errónea del modelo. Se postula que la volatilidad del tipo de cambio influye en una mayor utilización de los paquetes turísticos en algunos mercados, mientras que los efectos de la presencia del mercado en linea (online) moderan el impacto de la volatilidad del tipo de cambio en las llegadas de turistas. Los mercados también deberían explorar el potencial de atraer un mayor número de turistas mayores, ya que este grupo puede tener mayores ingresos disponibles, mitigando así la influencia de la volatilidad del tipo de cambio.

Limitaciones / implicaciones de la investigación

Algunas de las variables explicativas no estaban disponibles en una frecuencia alta y se tuvieron que utilizar proxies. Sin embargo, el enfoque utilizado fue consistente con otros artículos en la literatura.

Implicaciones practices

Los resultados del documento sugieren que los efectos de la volatilidad del tipo de cambio en los mercados de origen clave fueron compensados por factores no relacionados con los precios en algunos mercados y la existencia de la vinculación del tipo de cambio en otros. En particular, la presencia en línea (online) del destino fue uno de esos factores no relacionados con el precio destacados como importantes.

Originalidad

En la mayoría de los modelos teóricos de la demanda turística, la desagregación normalmente no se considera un aspecto significativo del modelo. Este documento contribuye a la literatura al investigar el impacto que la volatilidad efectiva del tipo de cambio real tiene sobre la demanda turística a nivel de país de origen desagregado. El enfoque resalta la importancia de modelar la demanda turística a un nivel desagregado y proporciona una perspectiva importante desde un destino insular pequeño y maduro.

1 – 10 of over 31000