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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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TL;DR: Tobin this paper argued that the main problem today is not the exchange rate regime, whether fixed or floating, but the excessive international mobility of private financial capi- tors.
Abstract: a system of pegged parities that relied on the debts in reserve currencies, mostly dollars, to meet growing needs for official reserves. Trif fin and his followers saw the remedy as the internationalization of reserves and reserve assets; their ultimate solution was a world central bank. Others diagnosed the problem less in terms of liquidity than in the inadequa cies of balance of payments adjustment mech anisms in the modern world. The inadequa cies were especially evident under the fixed parity gold-exchange standard when, as in the 1960s, the reserve currency center was struc turally in chronic deficit. These analysts sought better and more symmetrical "rules of the game" for adjustments by surplus and deficit countries, usually including more flexi bility in the setting of exchange parities, crawling pegs, and the like. Many economists, of whom Milton Friedman was an eloquent and persuasive spokesman, had all along advocated floating exchange rates, deter mined in private markets without official interventions. By the early 1970s the third view was the dominant one in the economics profession, though not among central bankers and private financiers. And all of a sudden, thanks to Nixon and Connally, we got our wish. Or at least we got as much of it as anyone could reasonably have hoped, since it could never have been expected that governments would eschew all intervention in exchange markets. Now after five to seven years?depending how one counts?of unclean floating there are many second thoughts. Some economists share the nostalgia of men of affairs for the gold standard or its equivalent, for a fixed anchor for the world's money, for stability of official parities. Some economists, those who emphasize the rationality of expectations and the flexibility of prices in all markets, doubt that it makes much difference whether exchange rates are fixed or flexible, provided only that government policies are predictable. Clearly, flexible rates have not been the pana-, cea which their more extravagant advocates had hoped; international monetary problems have not disappeared from headlines or from the agenda of anxieties of central banks and governments. I believe that the basic problem today is not the exchange rate regime, whether fixed or floating. Debate on the regime evades and obscures the essential problem. That is the excessive international?or better, inter currency?mobility of private financial capi tal. The biggest thing that happened in the world monetary system since the 1950s was "This paper is Prof. Tobin's presidential address at the 1978 conference of the Eastern Economic Association, Wash. D C.

977 citations

Book
14 May 2001
TL;DR: In this paper, a unified view of high frequency time series methods is presented, with particular emphasis on foreign exchange markets, as well as currency, interest rate, and bond futures markets.
Abstract: Liquid markets generate hundreds or thousands of ticks (the minimum change in price a security can have, either up or down) every business day. Data vendors such as Reuters transmit more than 275,000 prices per day for foreign exchange spot rates alone. Thus, high-frequency data can be a fundamental object of study, as traders make decisions by observing high-frequency or tick-by-tick data. Yet most studies published in financial literature deal with low frequency, regularly spaced data. For a variety of reasons, high-frequency data are becoming a way for understanding market microstructure. This book discusses the best mathematical models and tools for dealing with such vast amounts of data. This book provides a framework for the analysis, modeling, and inference of high frequency financial time series. With particular emphasis on foreign exchange markets, as well as currency, interest rate, and bond futures markets, this unified view of high frequency time series methods investigates the price formation process and concludes by reviewing techniques for constructing systematic trading models for financial assets.

968 citations

Journal ArticleDOI
TL;DR: The authors developed alternative assumptions leading to valuation formulas for foreign exchange options, which have strong connections with the commodity-pricing model of Black (1976), and with the proportional-dividend model of Samuelson and Merton (1969) when spot prices are given.

965 citations

Journal ArticleDOI
TL;DR: This paper argued that the benefits of trade created by currency union may swamp any costs of forgoing independent monetary policy, since national money seems to be a significant barrier to international trade in the data.
Abstract: Europeans are proceeding with Economic and Monetary Union (EMU); a number of countries in the Americas are pursuing dollarization. Why? Conventional wisdom is that the costs are high, since members of currency unions cannot employ domestic monetary policy to smooth business cycles. More intriguingly, most economists think that the economic benefits from currency union are low. We argue below that conventional wisdom may be wrong, since national money seems to be a significant barrier to international trade in the data. Currency unions lower these monetary barriers to trade and are thus associated with higher trade and welfare; we estimate that EMU will cause European trade to rise by over 50 percent. The benefits of trade created by currency union may swamp any costs of forgoing independent monetary policy.

912 citations

Journal ArticleDOI
TL;DR: This paper examined the use of foreign currency derivatives by a sample of 720 large U.S. non-financial firms between 1990 and 1995 and its potential impact on firm value using Tobin's Q as an approximation of a firm's market valuation.
Abstract: This paper examines the use of foreign currency derivatives (FCDs) by a sample of 720 large U.S. nonfinancial firms between 1990 and 1995 and its potential impact on firm value. Using Tobin's Q as an approximation of a firm's market valuation, we find a positive relationship between firm value and the use of FCDs. The hedging premium is statistically and economically significant mostly after 1993 and is on average 5.7\% of firm value. This result is robust to a) controls for size, profitability, leverage, growth opportunities, ability to access financial markets, industrial and geographical diversification, credit quality, industry classification (4-digit SIC), year-dummies and firm fixed-effects; b) the use of a weight-adjusted industry Tobin's Q and other measures of value, such as the market to book and the market to sales ratios; and, c) alternative estimation techniques that handle the potential impact of outliers. Using the ratio of foreign currency derivatives to foreign sales as a proxy for the percentage of exposure that a firm hedges, we observe a significant dispersion in our measure of the hedge ratio. In univariate tests we find a nonlinear relationship between Q and our proxy. However, firm-specific factors explain this relationship in multivariate tests and it appears that firms are hedging optimally.

911 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