Showing papers on "Currency published in 2012"
TL;DR: A discrete-choice panel analysis using 1973-2010 data suggests that domestic credit expansion and real currency appreciation have been the most robust and signicant predictors of financial crises, regardless of whether a country is emerging or advanced.
Abstract: A key precursor of twentieth-century financial crises in emerging and advanced economies alike was the rapid buildup of leverage. Those emerging economies that avoided leverage booms during the 2000s also were most likely to avoid the worst effects of the twenty-first century's first global crisis. A discrete-choice panel analysis using 1973-2010 data suggests that domestic credit expansion and real currency appreciation have been the most robust and signicant predictors of financial crises, regardless of whether a country is emerging or advanced. For emerging economies, however, higher foreign exchange reserves predict a sharply reduced probability of a subsequent crisis.
564 citations
TL;DR: This article updated the widely used banking crisis database by Laeven and Valencia (2008, 2010) with new information on recent and ongoing crises, including updated information on policy responses and outcomes (i.e., fiscal costs, output losses, and increases in public debt).
Abstract: We update the widely used banking crises database by Laeven and Valencia (2008, 2010) with new information on recent and ongoing crises, including updated information on policy responses and outcomes (i.e. fiscal costs, output losses, and increases in public debt). We also update our dating of sovereign debt and currency crises. The database includes all systemic banking, currency, and sovereign debt crises during the period 1970-2011. The data show some striking differences in policy responses between advanced and emerging economies as well as many similarities between past and ongoing crises.
457 citations
Posted Content•
TL;DR: This article updated the widely used banking crisis database by Laeven and Valencia (2008, 2010) with new information on recent and ongoing crises, including updated information on policy responses and outcomes (i.e., fiscal costs, output losses, and increases in public debt).
Abstract: We update the widely used banking crises database by Laeven and Valencia (2008, 2010) with new information on recent and ongoing crises, including updated information on policy responses and outcomes (i.e. fiscal costs, output losses, and increases in public debt). We also update our dating of sovereign debt and currency crises. The database includes all systemic banking, currency, and sovereign debt crises during the period 1970-2011. The data show some striking differences in policy responses between advanced and emerging economies as well as many similarities between past and ongoing crises.
453 citations
27 Feb 2012
TL;DR: In this paper, the authors perform an in-depth investigation to understand what made Bitcoin so successful, while decades of research on cryptographic e-cash has not lead to a large-scale deployment.
Abstract: Bitcoin is a distributed digital currency which has attracted a substantial number of users. We perform an in-depth investigation to understand what made Bitcoin so successful, while decades of research on cryptographic e-cash has not lead to a large-scale deployment. We ask also how Bitcoin could become a good candidate for a long-lived stable currency. In doing so, we identify several issues and attacks of Bitcoin, and propose suitable techniques to address them.
430 citations
Book•
01 Jan 2012
TL;DR: Eichengreen's "Exorbitant Privilege" as discussed by the authors traces the rise of the dollar to international prominence and shows how the greenback dominated internationally in the second half of the 20th century for the same reasons that the United States dominated the global economy.
Abstract: For more than half a century, the dollar has been not just America's currency but the world's. It is used globally by importers, exporters, investors, governments and central banks alike. This singular role of the dollar is a source of strength for the United States. It is, as a critic of U.S. policies once put it, America's "exorbitant privilege." But now, with U.S. budget deficits extending as far as the eye can see, holding dollars is viewed as a losing proposition. Some say that the dollar may soon cease to be the world's standard currency DS which would depress U.S. living standards and weaken the country's international influence. In Exorbitant Privilege, one of our foremost economists, Barry Eichengreen, traces the rise of the dollar to international prominence. He shows how the greenback dominated internationally in the second half of the 20th century for the same reasons that the United States dominated the global economy. But now, with the rise of China, India, Brazil and other emerging economies, America no longer towers over the global economy. It follows, Eichengreen argues, that the dollar will not be as dominant. But this does not mean that coming changes need be sudden and dire DL or that the dollar is doomed to lose its international status. Challenging the presumption that there is room for only one true global currency, Eichengreen shows that several currencies have regularly shared this role. What was true in the distant past will be true, once again, in the not-too-distant future. The dollar will lose its international currency status, Eichengreen warns, only if the United States repeats the mistakes that led to the financial crisis and only if it fails to put its fiscal and financial house in order. Incisive, challenging and iconoclastic, Exorbitant Privilege, is a fascinating analysis of the changes that lie ahead. It is a challenge, equally, to those who warn that the dollar is doomed and to those who regard its continuing dominance as inevitable.
429 citations
Posted Content•
TL;DR: In this article, the authors develop and estimate a long-run risks model with time-varying volatilities of expected growth and inflation, which simultaneously accounts for bond return predictability and violations of uncovered interest parity in currency markets.
Abstract: We show that bond risk-premia rise with uncertainty about expected inflation and fall with uncertainty about expected growth; the magnitude of return predictability using these two uncertainty measures is similar to that by multiple yields. Motivated by this evidence, we develop and estimate a long-run risks model with time-varying volatilities of expected growth and inflation. The model simultaneously accounts for bond return predictability and violations of uncovered interest parity in currency markets. We find that preference for early resolution of uncertainty, time-varying volatilities, and non-neutral effects of inflation on growth are important to account for these aspects of asset markets.
408 citations
TL;DR: In this article, the authors analyze a sample of 56,978 cross-border mergers between 1990 and 2007 and find that geography, the quality of accounting disclosure, and bilateral trade increase the likelihood of mergers among two countries.
Abstract: The vast majority of cross-border mergers involve private firms outside of the United States. We analyze a sample of 56,978 cross-border mergers between 1990 and 2007. We find that geography, the quality of accounting disclosure, and bilateral trade increase the likelihood of mergers between two countries. Valuation appears to play a role in motivating mergers: firms in countries whose stock market has increased in value, whose currency has recently appreciated, and that have a relatively high market-to-book value tend to be purchasers, while firms from weaker-performing economies tend to be targets. THE VOLUME OF CROSS-BORDER acquisitions has been growing worldwide, from 23% of total merger volume in 1998 to 45% in 2007. Conceptually, cross-border mergers occur for the same reasons as domestic ones: two firms will merge when their combination increases value (or utility) from the perception of the acquiring firm’s managers. However, national borders add an extra element to the calculus of domestic mergers because they are associated with an additional set of frictions that can impede or facilitate mergers. For example, cultural or geographic differences can increase the costs of combining two firms. Governance-related differences across countries can motivate a merger if the combined firm has better protection for target-firm shareholders because of higher governance standards in the country of the acquiring firm. Perhaps more importantly, imperfect integration of capital markets across countries can lead to a merger in which a higher-valued acquirer purchases a relatively inexpensive target following changes in exchange rates or stock market valuations in local currency. In this paper, we evaluate the extent to which these international factors influence the decision of firms to merge. Using a sample of 56,978 cross-border mergers occurring between 1990 and 2007, we estimate the factors that affect the likelihood that firms from any pair of countries merge in a particular year.
373 citations
22 Mar 2012
TL;DR: The euro area faces three interlocking crises that together challenge the viability of the currency union as mentioned in this paper, and these problems connect with one another in several ways: the problems of weak banks and high sovereign debt are mutually reinforcing, and both are exacerbated by weak growth but also constrain growth.
Abstract: The euro area faces three interlocking crises that together challenge the viability of the currency union. There is a banking crisis: banks are undercapitalized and have faced liquidity problems. There is a sovereign debt crisis: a number of countries have faced rising bond yields and challenges funding themselves. Lastly, there is a growth crisis: economic growth is slow in the euro area overall and unequally distributed across countries. These crises connect with one another in several ways: the problems of weak banks and high sovereign debt are mutually reinforcing, and both are exacerbated by weak growth but also in turn constrain growth. This paper details the three crises, their interconnections, and possible policy solutions. Policy responses that fail to take into account the interdependent nature of the problems will likely be incomplete or even counterproductive. A broader point also becomes clear: a currency union may not need a fiscal union, but it does likely need both a financial union and some way to adjust for unbalanced economic conditions across countries.
367 citations
TL;DR: In this paper, the Tanner Lecture of 1979, Amartya Sen asked what aspect(s) of a person's condition should count in a fundamental way for egalitarians, and not merely as cause of or evidence of or proxy for what they regard as fundamental.
Abstract: In his Tanner Lecture of 1979 called “Equality of What?” Amartya Sen asked what metric egalitarians should use to establish the extent to which their ideal is realized in a given society. What aspect(s) of a person’s condition should count in a fundamental way for egalitarians, and not merely as cause of or evidence of or proxy for what they regard as fundamental? In this study I examine answers to that question, and discussions bearing on that question, in recent philosophical literature. I take for granted that there is something which justice requires people to have equal amounts of, not no matter what, but to whatever extent is allowed by values which compete with distributive equality; and I study what a number of authors who share that egalitarian view have said about the dimension(s) or respect(s) in which people should be made more equal, when the price in other values of moving toward greater equality is not intolerable. I also advance an answer of my own to Sen’s question. My answer is the product of an immanent critique of Ronald Dworkin, one, that is, which rejects Dworkin’s declared position because it is not congruent with its own underlying motivation. My response to Dworkin has been influenced by Richard Arneson’s work in advocacy of “equality of opportunity for welfare,” but my answer to Sen’s question is not that Arnesonian one, nor is my answer as well formulated as Arneson’s is.1 It needs much further refinement, but I nevertheless present it here, in a rough-and-ready form, because of its association with relatively fi nished criticisms of others which I think are telling. If this study contributes to understanding, it does so more because of those criticisms than because of the positive doctrine it affi rms.
325 citations
TL;DR: In this article, the authors provide a broad empirical investigation of momentum strategies in the foreign exchange market and find a significant cross-sectional spread in excess returns of up to 10% per annum (p.a.) between past winner and loser currencies.
304 citations
Book•
07 Aug 2012
TL;DR: In this paper, the authors present an overview of the basics of modern money theory and its application in the context of the Euro and its role in economic stability and growth in the US economy.
Abstract: Contents List Of Illustrations Preface Box: Definitions Introduction The Basics Of Modern Money Theory 1. The Basics Of Macroeconomic Accounting 1.1.The Basics Of Accounting For Stocks And Flows 1.2.MMT, Sectoral Balances, And Behavior 1.3. Stocks, Flows, And Balance Sheet: A Bathtub Analogy 1.4. Government Budget Deficits Are Largely Nondiscretionary: The Case Of The Great Recession Of 2007 1.5. Accounting For Real Versus Financial 1.6. Recent US Sectoral Balances: Goldilocks And The Global Crash 2. Spending By Issuer Of Domestic Currency 2.1. What Is A Sovereign Currency? 2.2. What Backs Up Currency And Why Would Anyone Accept It? 2.3. Taxes Drive Money 2.4. What If The Population Refuses To Accept The Domestic Currency? 2.5. Record Keeping In The The Money Of Account 2.6. Sovereign Currency And Monetizing Real Assets 2.7. Sustainability Conditions 3. The Domestic Monetary System: Banking And Central Banking 3.1. Ious Denominated In The National Currency 3.2. Clearing And The Pyramid Of Liabilities 3.3. Central Bank Operations In Crisis: Lender Of Last Resort 3.4. Balance Sheets Of Banks, Monetary Creation By Banks, And Interbank Settle-Ment 3.5. Exogenous Interest Rates And Quantitative Easing 3.6. The Technical Details Of Central Bank And Treasury Coordination: The Case Of The Fed 3.7. Treasury Debt Operations 3.8. Conclusions On Fed And Treasury Roles 4. Fiscal Operations In A Nation That Issues Its Own Currency 4.1. Introductory Principles 4.2. Effects Of Sovereign Government Budget Deficits On Saving, Reserves, And In-Terest Rates 4.3. Government Budget Deficits And The 'Two-Step' Process Of Saving 4.4. What If Foreigners Hold Government Bonds? 4.5. Currency Solvency And The Special Case Of The US Dollar 4.6. Sovereign Currency And Government Policy In The Open Economy 4.7. What About A Country That Adopts A Foreign Currency? 5. Tax Policy For Sovereign Nations 5.1. Why Do We Need Taxes? The MMT Perspective 5.2. What Are Taxes For? The MMT Approach 5.3. Taxes For Redistribution 5.4. Taxes And The Public Purpose 5.5. Tax Bads, Not Goods 5.6. Bad Taxes 6. Modern Money Theory And Alternative Exchange Rate Regimes 6.1.The Gold Standard And Fixed Exchange Rates 6.2. Floating Exchange Rates 6.3. Commodity Money Coins? Metalism Versus Nominalism, From Mesopotamia To Rome 6.4. Commodity Money Coins? Metalism Versus Nominalism, After Rome 6.5. Exchange Rate Regimes And Sovereign Defaults 6.6. The Euro: The Set-Up Of A Nonsovereign Currency 6.7. The Crisis Of The Euro 6.8. Endgame For The Euro? 6.9. Currency Regimes And Policy Space: Conclusion 7. Monetary And Fiscal Policy For Sovereign Currencies: What Should Government Do? 7.1. Just Because Government Can Afford To Spend Does Not Mean Government Ought To Spend 7.2. The 'Free' Market And The Public Purpose 7.3. Functional Finance 7.4. Functional Finance Versus The Government Budget Constraint 7.5. The Debate About Debt Limits (US Case) 7.6. A Budget Stance For Economic Stability And Growth 7.7. Functional Finance And Exchange Rate Regimes 7.8. Functional Finance And Developing Nations 7.9. Exports Are A Cost, Imports Are A Benefit: A Functional Finance Approach 8. Policy For Full Employment And Price Stability 8.1. Functional Finance And Full Employment 8.2. The JG/ELR For A Developing Nation 8.3. Program Manageability 8.4. The JG/ELR And Real World Experience 8.5. The JG And Inequality 8.6. Conclusions On Full Employment Policy 8.7. MMT For Austrians: Can A Libertarian Support The JG? 9. Inflation And Sovereign Currencies 9.1. Inflation And The Consumer Price Index 9.2. Alternative Explanations Of Hyperinflation 9.3. Real-World Hyperinflations 9.4. Conclusions On Hyperinflation 9.5. Conclusion: MMT And Policy 10. Conclusions: Modern Money Theory For Sovereign Currencies 10.1. MMT Got It Right: The Global Financial Crisis 10.2. MMT Got It Right: The Euro Crisis 10.3. Creastionism Versus Redemptionism: How A Money-Issuer Really Lends And Spends 10.4. Growing Recognition Of The Need For A Job Guarantee 10.5. MMT And External Constraints: To Fix Or To Float, That Is The Question 10.6. A Meme For Money Notes Bibliography Index
01 Mar 2012
TL;DR: The real effective exchange rate (REER), which measures the development of the real value of a country's currency against the basket of the trading partners of the country, is a frequently used variable in both theoretical and applied economic research and policy analysis as discussed by the authors.
Abstract: The real effective exchange rate (REER), which measures the development of the real value of a country’s currency against the basket of the trading partners of the country, is a frequently used variable in both theoretical and applied economic research and policy analysis. It is used for a wide variety of purposes, such as assessing the equilibrium value of a currency, the change in price or cost competitiveness, the drivers of trade flows, or incentives for reallocation production between the tradable and the non-tradable sectors.
Due to the importance of the REER in economic research and policy analysis, several institutions, such as the World Bank, the Eurostat, the BIS, the OECD, just to name a few, publish various REER indicators which are freely downloadable. Altogether, these institutions publish data for 113 countries. The countries for which data are available include all advanced and several emerging and developing countries. However, different databases may have different methodologies and even the 109 countries included in the World Bank database miss several dozen countries of the world.
Our database has three novelties:
Using a consistent methodology, we calculate CPI-based REER for 178 countries (plus the euro area) for annual data and for 153 countries (plus the euro area) for monthly data.
We calculate the REER for all countries up to date, eg in the current vintage of the database we calculate up to January 2012.
It is relatively easy to calculate REER against any arbitrary group of countries – what is needed for this is a re-scaling of the weighting matrix.
The database will be irregularly updated.
TL;DR: In this article, a comparative analysis of the international political economy of China is presented, where the authors argue that China's stance and strategy in the international economic economy hew quite closely to Sino-capitalism's hybrid compensatory institutional arrangements on the domestic level: state guidance; flexible and entrepreneurial networks; and global integration.
Abstract: There is little doubt that China's international reemergence represents one of the most significant events in modern history. As China's political economy gains in importance, its interactions with other major political economies will shape global values, institutions, and policies, thereby restructuring the international political economy. Drawing on theories and concepts in comparative capitalism, the author envisages China's reemergence as generating Sino-capitalism—a capitalist system that is already global in reach but one that differs from Anglo-American capitalism in important respects. Sino-capitalism relies more on informal business networks than legal codes and transparent rules. It also assigns the Chinese state a leading role in fostering and guiding capitalist accumulation. Sino-capitalism, ultimately, espouses less trust in free markets and more trust in unitary state rule and social norms of reciprocity, stability, and hierarchy. After conceptualizing Sino-capitalism's domestic political economy, the author uses the case of China's efforts to internationalize its currency, the yuan or renminbi, to systematically illustrate the multifarious manner in which the domestic logic of Sino-capitalism is expressed at the global level. Rather than presenting a deterministic argument concerning the future international role of China, he argues that China's stance and strategy in the international political economy hew quite closely to Sino-capitalism's hybrid compensatory institutional arrangements on the domestic level: state guidance; flexible and entrepreneurial networks; and global integration. Sino-capitalism therefore represents an emerging system of global capitalism centered on China that is producing a dynamic mix of mutual dependence, symbiosis, competition, and friction with the still dominant Anglo-American model of capitalism.
TL;DR: This paper found that currency union impact on trade is decreasing over time, which suggests that currency unions become less and less important to promote trade and financial globalization, and thus currency unions are less important in promoting trade.
01 Jan 2012
TL;DR: In this paper, the authors examine a few relevant legal issues, such as the recent conviction of the Liberty Dollar creator, the Stamp Payments Act, and the federal securities acts, and examine their impact on Bitcoin's legal status.
Abstract: Bitcoin is a digital, decentralized, partially anonymous currency, not backed by any government or other legal entity, and not redeemable for gold or other commodity. It relies on peer-to-peer networking and cryptography to maintain its integrity. Compared to most currencies or online payment services, such as PayPal, bitcoins are highly liquid, have low transaction costs, and can be used to make micropayments. This new currency could also hold the key to allowing organizations such as Wikileaks, hated by governments, to receive donations and conduct business anonymously. Although the Bitcoin economy is flourishing, Bitcoin users are anxious about Bitcoin’s legal status. This paper examines a few relevant legal issues, such as the recent conviction of the Liberty Dollar creator, the Stamp Payments Act, and the federal securities acts.
TL;DR: This paper updated the widely used banking crisis database by Laeven and Valencia (2008, 2010) with new information on recent and ongoing crises, including updated information on policy responses and outcomes (i.e., fiscal costs, output losses, and increases in public debt).
Abstract: We update the widely used banking crises database by Laeven and Valencia (2008, 2010) with new information on recent and ongoing crises, including updated information on policy responses and outcomes (i.e. fiscal costs, output losses, and increases in public debt). We also update our dating of sovereign debt and currency crises. The database includes all systemic banking, currency, and sovereign debt crises during the period 1970–2011. The data show some striking differences in policy responses between advanced and emerging economies as well as many similarities between past and ongoing crises.
Patent•
16 Aug 2012TL;DR: In this article, the authors proposed a system where a loyalty program participant can use an existing transaction card to purchase an item over a computerized network, while at the same time offsetting the cost of that transaction by converting loyalty points to a currency value credit and having the credit applied to the participant's financial transaction account.
Abstract: The present invention involves spending loyalty points over a computerized network to facilitate a transaction. With this system, a loyalty program participant is able to use an existing transaction card to purchase an item over a computerized network, while at the same time offsetting the cost of that transaction by converting loyalty points to a currency value credit and having the credit applied to the participant's financial transaction account. Currency credit from converted loyalty points may also be applied to stored value cards, online digital wallet accounts and the like. Further, currency credit may also be applied to other accounts to effect a gift or donation.
Posted Content•
TL;DR: In this article, the authors identify fiscal shocks as residuals from an estimated spending rule and trace their macroeconomic impact under different conditions regarding the exchange rate regime, public indebtedness, and health of the financial system.
Abstract: This paper studies how the effects of government spending vary with the economic environment. Using a panel of OECD countries, we identify fiscal shocks as residuals from an estimated spending rule and trace their macroeconomic impact under different conditions regarding the exchange rate regime, public indebtedness, and health of the financial system. The unconditional responses to a positive spending shock broadly confirm earlier findings. However, conditional responses differ systematically across exchange rate regimes, as real appreciation and external deficits occur mainly under currency pegs. We also find output and consumption multipliers to be unusually high during times of financial crisis.
TL;DR: The authors analyzes the implications of this fragility for the governance of the eurozone and concludes that the new governance structure, which is intended to be successor starting in 2013 of the European Financial Stability Mechanism (EFSF), created in May 2010, does not sufficiently recognize the fragility.
Abstract: When entering a monetary union, member countries change the nature of their sovereign debt in a fundamental way, i.e. they cease to have control over the currency in which their debt is issued. As a result, financial markets can force these countries’ sovereigns into default. In this sense, member countries of a monetary union are downgraded to the status of emerging economies. This makes the monetary union fragile and vulnerable to changing market sentiments. It also makes it possible that self-fulfilling multiple equilibria arise. This paper analyzes the implications of this fragility for the governance of the eurozone. It concludes that the new governance structure – the European Stability Mechanism (ESM), which is intended to be successor starting in 2013 of the European Financial Stability Mechanism (EFSF), created in May 2010 – does not sufficiently recognize this fragility. Some of the features of the new financial assistance are likely to increase this fragility. In addition, it is also likely to present member countries from using the automatic stabilizers during a recession. This is surely a step backward in the long history of social progress in Europe. The author concludes by suggesting a different approach for dealing with these problems.
TL;DR: In this paper, the authors provide explicit solutions for government spending multipliers during a liquidity trap and within a fixed exchange regime using standard closed and open-economy models, and confirm the potential for large government spending during liquidity traps.
Abstract: We provide explicit solutions for government spending multipliers during a liquidity trap and within a fixed exchange regime using standard closed and open-economy models. We confirm the potential for large multipliers during liquidity traps. For a currency union, we show that self-financed multipliers are small, always below unity. However, outside transfers or windfalls can generate larger responses in output, whether or not they are spent by the government. Our solutions are relevant for local and national multipliers, providing insight into the economic mechanisms at work as well as the testable implications of these models.
TL;DR: The authors investigated the locational determinants of Chinese Multinational Enterprises (MNEs) and found that state-owned MNEs, compared to their peers without controlling state equity, are less concerned about political risk of the host country, but more responsive to favorable exchange rate between Chinese RMB and the host currency.
Posted Content•
TL;DR: The authors analyzes the implications of this fragility for the governance of the eurozone and concludes that the new governance structure, which is intended to be successor starting in 2013 of the European Financial Stability Mechanism (EFSF), created in May 2010, does not sufficiently recognize the fragility.
Abstract: When entering a monetary union, member countries change the nature of their sovereign debt in a fundamental way, i.e. they cease to have control over the currency in which their debt is issued. As a result, financial markets can force these countries’ sovereigns into default. In this sense, member countries of a monetary union are downgraded to the status of emerging economies. This makes the monetary union fragile and vulnerable to changing market sentiments. It also makes it possible that self-fulfilling multiple equilibria arise. This paper analyzes the implications of this fragility for the governance of the eurozone. It concludes that the new governance structure – the European Stability Mechanism (ESM), which is intended to be successor starting in 2013 of the European Financial Stability Mechanism (EFSF), created in May 2010 – does not sufficiently recognize this fragility. Some of the features of the new financial assistance are likely to increase this fragility. In addition, it is also likely to present member countries from using the automatic stabilizers during a recession. This is surely a step backward in the long history of social progress in Europe. The author concludes by suggesting a different approach for dealing with these problems.
TL;DR: In this article, the authors investigate the fundamentals of safe haven currencies, which are those currencies that provide an hedge for a reference portfolio of risky assets, conditional on shocks to global risk aversion, and find that only a few factors are robustly associated to a safe haven status, most notably the net foreign asset position, an indicator of external vulnerability, and whether currencies have been a good hedge in the past.
TL;DR: In this paper, the impact of currency devaluations on area of production in South America's soybean expansion has been investigated and the authors found that approximately 80,000 km 2, or 31% of the current extent of soybean production in these countries, emerged as a supply area response to the devaluation of local currencies in the late 1990s.
Abstract: The advancement of South America's agro-pastoral frontier has been widely linked to losses in biodiversity and tropical forests, with particular impacts on the Brazilian cerrado, the Atlantic Forest, and the Amazon. Here we consider an important, yet largely overlooked, driver of South America's soybean expansion, namely the devaluation of local currencies against the US dollar in the late 1990s and early 2000s. Much interest has emerged in recent years over the environmental implications of soybean production in Brazil, with evidence of both direct incursions into moist tropical forest by soybean producers and of potential indirect effects, via the displacement of existing ranching operations. In this research we utilize historical trends in soybean prices, exchange rates, and cropland dedicated to soybean production in Bolivia, Paraguay, and Brazil to estimate the impact of currency devaluations on area of production. The results suggest that approximately 80,000 km 2 , or 31% of the current extent of soybean production in these countries, emerged as a supply area response to the devaluation of local currencies in the late 1990s. The results also indicate that the more recent depreciation of the dollar and appreciation of the Brazilian real have counteracted a recent rise in global soybean prices, in the process sparing an estimated nearly 90,000 km 2 from new cropland, 40,000 km 2 of this in the Amazon alone. Amidst an increasingly neoliberal economic environment, where barriers to trade are jettisoned in favor of the free flow of commodities, relative currency values will occupy an important role in the future sourcing of both agricultural expansion and environmental degradation.
TL;DR: In this paper, the relevance of technical and fundamental variables in forming currency portfolios was tested and the resulting optimal portfolio outperformed the carry trade and other naive benchmarks in an extensive 16-year out-of-sample test.
Abstract: We test the relevance of technical and fundamental variables in forming currency portfolios. Carry, momentum and reversal all contribute to portfolio performance, whereas the real exchange rate and the current account do not. The resulting optimal portfolio outperforms the carry trade and other naive benchmarks in an extensive 16 year out-of-sample test. Its returns are not explained by risk and are valuable to diversified investors holding stocks and bonds. Exposure to currencies increases the Sharpe ratio of diversified portfolios by 0.5 on average, while reducing crash risk. We argue that currency returns are an anomaly which is gradually being corrected as hedge fund capital increases.The appendix may be found here: http://ssrn.com/abstract=2771667.
TL;DR: The authors provide a bibliography of major scholarly writings and many minor writings on currency boards up to mid 2011, which includes two previous bibliographies of currency boards, and include references relevant to currency boards.
Abstract: We provide a bibliography of major scholarly writings and many minor writings on currency boards up to mid 2011. Our bibliography incorporates two previous bibliographies on currency boards. Dr. Kurt Schuler’s 1992 Ph.D. dissertation on the history of currency boards compiled a list of works on currency boards up to then. Schuler listed a number of annual reports of currency boards and other primary sources, but concentrated on scholarly writings by economists in books and economic journals. He relied in part on a 1959 bibliography by the English economist Arthur Hazlewood on the economics of underdeveloped areas, which included a number of references relevant to currency boards. Schuler compiled his bibliography at the end of a long period in which economists had paid little attention to currency boards, and several years before Internet search engines became useful tools for bibliographical research in economics.
TL;DR: In this article, the authors provide new empirical evidence that world currency and U.S. stock variance risk premiums have non-redundant and significant predictive power for the appreciation rates of 22 currencies with respect to the US dollar, especially at the 4-month and 1-month horizons.
TL;DR: In this article, the authors apply binary-outcome classication tests to show that directional trading forecasts are informa- tive, and out-of-sample loss-function analysis to examine trading performance.
TL;DR: This article studied whether evolution in the number of Google Internet searches for particular keywords can predict volatility in the market for foreign currency and found that data on Google searches for the keywords economic crisis+financial crisis and recession has incremental predictive power beyond the GARCH(1,1).
Posted Content•
TL;DR: The 9th edition of the Economics of Monetary Union as mentioned in this paper provides a concise analysis of the theories and policies relating to monetary union, as well as the practical workings and current issues with the Euro.
Abstract: The ninth edition of Economics of Monetary Union provides a concise analysis of the theories and policies relating to monetary union. The author analyses both the costs and benefits associated with having one currency, as well as the practical workings and current issues with the Euro. In Part One the author examines the implications of adopting a common currency; assessing the countries benefit from being in the Eurozone members, while also questioning whether other parts of the world would gain from monetary unification. Part Two of the book looks at the problems of running a monetary union by analysing Europe's experience and the issues faced by the European Central Bank. Review comments: 'As a book that focuses on the Economics of the EMU, it is literally and metaphorically without competition and thus beyond compare'. Professor Rob Ackrill, Nottingham Trent University 'I think it is the best in the field.' Dr Matteo Iannizzotto, Durham University 'It is clearly the leading textbook for lecturers teaching modules in European Integration and a key reference for students and researchers.' Dr Jan Fidrmuc, Brunel University Online Resource Centre: For Students: Links to data sources Essay questions links to articles and papers For Lecturers: Instructor manual PowerPoint slides