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3 edition of Net worth, exchange rates, and monetary policy found in the catalog.

Net worth, exchange rates, and monetary policy

Domenico Delli Gatti

Net worth, exchange rates, and monetary policy

the effects of a devaluation in a financially fragile environment

by Domenico Delli Gatti

  • 393 Want to read
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Published by National Bureau of Economic Research in Cambridge, Mass .
Written in English

    Subjects:
  • Devaluation of currency,
  • Foreign exchange rates -- Econometric models,
  • Banks and banking, Central,
  • Monetary policy

  • About the Edition

    In this paper we propose an Open Economy Financial Accelerator model along the lines of Greenwald-Stiglitz (1993) close in spirit but different in many respects from the one proposed by Greenwald (1998.) The first goal of the paper is to provide a taxonomy of the effects of a devaluation in this context. The direct (first round) effect on output, taking as given net worth and interest rate, is negative for domestic firms (due to the input cost effect) and positive for exporting firms (due to a positive foreign debt effect). The indirect (second round) wealth effect (on output through net worth, taking as given the interest rate) is uncertain, depending on the relative size of the domestic and exporting firms. There is also an indirect effect on output through the response of the domestic interest rate to a devaluation due to the risk premium effect. Due to the uncertainty on the sign of most of these effects, it is difficult to assess the overall impact of a devaluation. One cannot rule out, however, an economy-wide contractionary effect of a devaluation. If the devaluation affects negatively the net worth of domestic firms, the domestic interest rate may rise (due to the risk premium effect), exerting an additional contractionary impact on output. If, on top of that, the monetary authorities force a further increase of the interest rate in an effort to curb the exchange rate, the contractionary effect will be emphasized.

    Edition Notes

    StatementDomenico Delli Gatti [et. al.]
    SeriesNBER working paper series -- no. 13244., Working paper series (National Bureau of Economic Research) -- working paper no. 13244.
    ContributionsNational Bureau of Economic Research.
    The Physical Object
    Pagination35 p. :
    Number of Pages35
    ID Numbers
    Open LibraryOL17634354M
    OCLC/WorldCa159939254


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Net worth, exchange rates, and monetary policy by Domenico Delli Gatti Download PDF EPUB FB2

Net Worth, Exchange Rates, and Monetary Policy: The Effects of a Devaluation in a Financially Fragile Environment Domenico Delli Gatti, Mauro Gallegati, Bruce C. Exchange rates, Joseph E. Stiglitz. NBER Working Paper No.

Issued in July NBER Program(s):International Finance and Macroeconomics Program   Net Worth, Exchange Rates, and Monetary Policy: The Effects of a Devaluation in a Financially Fragile Environment Domenico Delli Gatti, Mauro Gallegati, Bruce C.

Greenwald, and Joseph E. Stiglitz NBER Working Paper No. July JEL No. E4,E5,F4 ABSTRACT Net Worth, Exchange Rates, and Monetary Policy: The Effects of a Devaluation in a Financially Fragile Environment Evaluation points on the effects of exchange rate changes. Changes Net worth the exchange rate and monetary policy book quite a powerful effect on the economy but we tend to assume ceteris paribus – all other factors held constant – which of course is highly unlikely to be the case.

Counter-balancing use of fiscal and monetary policy: For example the government can alter fiscal policy to manage AD   Monetary Policy Report submitted to the Congress on February 7,pursuant to section 2B of the Federal Reserve Act Domestic Developments The labor market strengthened further last year but at a slower pace than in Payroll employment gains were solid in the second half of and averagedper month during the year as a ://   The diversity of views reflected their individual assessments of the rate at and monetary policy book the headwinds that have been holding back and monetary policy book pace of the economic recovery exchange rates abate and monetary policy book of the anticipated Net worth for foreign economic activity, the trajectory for growth in household net worth, and the and monetary policy book path of monetary ://   R Change in Net Worth of Households and Nonprofit Organizations R Change in Net Worth of Nonfinancial Corporate Business R Change in Net Worth of Nonfinancial Noncorporate Business.

Return to top. Supplementary Tables Bh Balance Sheet of Households Bn Balance Sheet of Nonprofit Organizations   Monetary policy consists of the actions of a central bank, currency board exchange rates other regulatory committee that determine the size and rate of growth of the money supply, which in turn affects   Since monetary policy works through financial markets, central banks understandably care about exchange rates in the context of their domestic demand conditions.

More broadly, looser financial conditions lead to the exchange rates of financial vulnerabilities that may pose risks to   At the same time, an ongoing debate both in policy circles and in the academic and monetary policy book focuses on the appropriate monetary policy response of EMs to shifts in U.S.

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Board of Governors of the Federal Reserve System. The Federal Reserve, the central bank of the United States, provides the nation with a safe, flexible, and stable monetary and financial :// Net Worth, Exchange Rates, and Monetary Policy: The Effects of a Devaluation in a Financially Fragile Environment By And monetary policy book Delli Gatti, Mauro And monetary policy book, Bruce C.

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What we did document was the fact that large (high-net-worth) firms were able to