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Currency

About: Currency is a research topic. Over the lifetime, 26697 publications have been published within this topic receiving 485370 citations. The topic is also known as: monetary unit & unit of money.


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Journal ArticleDOI
TL;DR: In this paper, the authors calibrate a two-country model in which agents make infrequent portfolio decisions to account for the forward discount puzzle and the delayed overshooting problem.
Abstract: A major puzzle in international finance is that high interest rate currencies tend to appreciate (forward discount puzzle). Motivated by the fact that only a small fraction of foreign currency holdings is actively managed, we calibrate a two-country model in which agents make infrequent portfolio decisions. We show that the model can account for the forward discount puzzle. It can also account for several related empirical phenomena, including that of "delayed overshooting." We also show that making infrequent portfolio decisions is optimal as the welfare gain from active currency management is smaller than the corresponding fees.

350 citations

Journal ArticleDOI
TL;DR: The development of the regionally integrated institutions of an expanding state society is predicated on the growth of systems of economic support as discussed by the authors, and both expansion of existing systems of finance and the development of alternative systems of revenue may be of central importance to the state political economy.
Abstract: The development of the regionally integrated institutions of an expanding state society is predicated on the growth of systems of economic support. Both expansion of existing systems of finance and the development of alternative systems of revenue, such as tribute, administered exchange, and centralized taxation, may be of central importance to the state political economy. This paper examines the reorganization of the economic systems of the Inka state and the development of new forms of finance. State finance is dichotomized as staple finance, the direct or indirect mobilization of subsistence and utilitarian goods, and wealth finance, the manufacture and procurement of valuables, primitive money, and currency. It is argued that the requirements of production and management of goods were as important as the social relations of labor and exchange that are the focus of current discussions of the state political economy. The organization of the massive state storage system, specifically in the Upper Mantaro...

346 citations

Journal ArticleDOI
TL;DR: In this article, the authors describe the rationale for the launch of the Alcohol Program from sugarcane in Brazil in the mid 1970s as an answer to the first “oil crisis” as well as a solution to the problem of fluctuating sugar prices in the international market.

346 citations

Journal ArticleDOI
TL;DR: This article examined the benefits of currency hedging, both for speculative and risk minimization motives, in international bond and equity portfolios, and showed that the use of forward contracts significantly improves the risk-return tradeoff of global portfolios and outperforms unconditional hedging strategies.
Abstract: This paper examines the benefits from currency hedging, both for speculative and risk minimization motives, in international bond and equity portfolios. The riskreturn performances of globally diversified portfolios are compared with and without forward contracts. Over the period 1974 to 1990, inclusion of forward contracts results in statistically significant improvements in the performance of unconditional portfolios containing bonds. Conditional strategies are also implemented, both in sample and out of sample, and are shown to both significantly improve the risk-return tradeoff of global portfolios and to outperform unconditional hedging strategies. WHETHER INTERNATIONAL PORTFOLIOS SHOULD be hedged against currency risks is the subject of an active debate. The theoretical side of the debate has been closely associated with two strands in the academic literature: international asset pricing and optimal hedging in the futures markets. In the international asset-pricing model (IAPM) of Solnik (1974), optimal portfolios contain positions in forward contracts, or equivalently foreign currency denominated bills. These positions, which can differ from the positions in foreign stocks, have since been termed "hedges." Black (1990) shows that, under additional assumptions, the hedge ratios should be identical for all investors regardless of their nationality (universality) and that investors should never fully hedge their foreign currency exposures. Similarly, theoretical models from the futures literature produce demands for hedging instruments that contain both speculative and hedging components. The empirical issue, unanswered so far, is whether adding forward contracts to international portfolios significantly improves the risk-return profile of global investments. Empirical research has barely begun to respond to the challenges of theoretical models; there exists little empirical evidence on either the relevance of Black's universal hedge ratios, or the optimality of hedge ratios less than one. Instead, researchers have concentrated on the benefits of fully hedging exchange risk. For example, Eun and Resnick (1988) indicate that stock portfolios perform better when fully hedged, but offer no statistical tests

342 citations

Journal ArticleDOI
TL;DR: This article provided new evidence that crises in high-income countries tend to last longer and be associated with higher output losses, lower fiscal costs, and more extensive use of bank guarantees and expansionary macro policies than crises in low-and middle-income country.
Abstract: This paper updates the database on systemic banking crises presented in Laeven and Valencia (2008, 2013). Drawing on 151 systemic banking crises episodes around the globe during 1970-2017, the database includes information on crisis dates, policy responses to resolve banking crises, and the fiscal and output costs of crises. We provide new evidence that crises in high-income countries tend to last longer and be associated with higher output losses, lower fiscal costs, and more extensive use of bank guarantees and expansionary macro policies than crises in low- and middle-income countries. We complement the banking crises dates with sovereign debt and currency crises dates to find that sovereign debt and currency crises tend to coincide or follow banking crises.

341 citations


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Performance
Metrics
No. of papers in the topic in previous years
YearPapers
20244
20231,221
20222,371
2021730
2020944
20191,044