This paper explicitly takes into account the dynamic oligopolistic rivalry among source producers to evaluate the degree of exchange rate pass-through. Using recent time-series techniques for the case of imported automobiles in Switzerland, the results show that prices are strategic complements and that the degree of pass-through is lower in the long run than in the short run. We attribute this to the fact that, although some rivals match long-term price changes, others do not, inducing the producer who faces a change in exchange rate to absorb a greater proportion of the variation.
Volatile exchange rates and how to manage them are a contentious topic whenever economic policymakers gather in international meetings. This book examines the broad parameters of exchange rate policy in light of both high-powered theory and real-world experience. What are the costs and benefits of flexible versus fixed exchange rates? How much of a role should the exchange rate play in monetary policy? Why don't volatile exchange rates destabilize inflation and output? The principal finding of this book is that using monetary policy to fight exchange rate volatility, including through the adoption of a fixed exchange rate regime, leads to greater volatility of employment, output, and inflation. In other words, the "cure" for exchange rate volatility is worse than the disease. This finding is demonstrated in economic models, in historical case studies, and in statistical analysis of the data. The book devotes considerable attention to understanding the reasons why volatile exchange rates do not destabilize inflation and output. The book concludes that many countries would benefit from allowing greater flexibility of their exchange rates in order to target monetary policy at stabilization of their domestic economies. Few, if any, countries would benefit from a move in the opposite direction.
Contains original papers that examine various issues concerning the role, the structure and functioning of credit, currency and derivatives instruments and markets as they relate to financial crises. This title stresses the importance of the inter-linkages of these instruments and markets in promoting or hindering financial stability or crises.
This book was written in honour of Professor Kalyan K. Sanyal, who was an excellent educator and renowned scholar in the field of international economics. One of his research papers co-authored with Ronald Jones, entitled “The Theory of Trade in Middle Products” and published in American Economic Review in 1982, was a seminal work in the field of international trade theory. This paper would go on to inspire many subsequent significant works by researchers across the globe on trade in intermediate goods. The larger impact of any paper, beyond the number of citations, lies in terms of the passion it sparks among younger researchers to pursue new questions. Measured by this yardstick, Sanyal’s contribution in trade theory will undoubtedly be regarded as historic. After completing his Ph.D. at the University of Rochester he joined the Department of Economics at Calcutta University in the early 1980s and taught trade theory there for almost three decades. His insights, articulation and brilliance in teaching international economics have influenced and shaped the intellectual development of many of his students. After his sudden passing in February 2012, his students and colleagues organized a symposium in his honour at the Department of Economics, Jadavpur University from April 19 to 20, 2012. This book, a small tribute to his intellect and contribution, has been a follow-up on that endeavour, and a collective effort of many people including his teachers, friends, colleagues and students. In a nutshell it discusses intermediation of various kinds with significant implications for market integration through trade and finance. That trade can generate many non-trade-service sector links has recently emerged as a topic of growing concern and can trace its lineage back to the idea of the middle product, a recurring concept in Prof. Sanyal’s work.
In recent years, international trade has become a subject of increaed practical importance and also one of the most intellectually exciting parts of economics. In his introduction to this volume, Paul Krugman outlines why this is so, by analysing the original contribution of the New Trade Theory in interpreting and explaining the observed trade behaviour of the past twenty years. Then follow sections which discuss: formal tests of the New Trade Theory, Price Discrimination and Exchange Rate, as well as New Protectionism, measures of Comparative Advantages and Import Demand in industrialized and developing countries. Some chapters also use GCE models to evaluate Trade Protectionism, while others encompass External Trade within aggregate Disequilibrium Models.
The paper uses a dynamic panel data model to estimate the pass-through coefficients of 20 nine-digit industrial commodities that are traded between Japan and its East Asian trading partners to investigate the response of tradable goods prices to exchange rate movements. By using the monthly series of unit export and import values obtained from the Japanese customs data for the period 1988-98, it shows that price pass-through is much larger for exports from Japan than for imports to Japan.
Written from a European perspective, this text offers coverage of all the key elements of international economics: trade, money and finance. A firm emphasis is placed on ensuring that students understand how the theory relates to real world examples, providing undergraduate students witheverything they need to understand this course. Empirical and Political detail is given close attention. International Economics contains 32 chapters split into 2 parts with part one covering International Trade and Part two covering International Money. A comprehensive online study guide for students will support the text with further This text is supported by an Online Resource Centre that includes a comprehensive study guide to assist students in reinforcing what they have learnt and preparing for exams.
