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Begin New Search Topic Exchange Rate Policy Publication Year within 3 Years

1. EFFECT OF CORRUPTION ON FOREIGN DIRECT INVESTMENT INFLOWS IN COUNTRIES OF THE WESTERN BALKANS

Author:
Artan Hajdini, Lum Collaku, and Safet Merovci
Publication Date:
03-2023
Content Type:
Journal Article
Journal:
Journal of Liberty and International Affairs
Institution:
Institute for Research and European Studies (IRES)
Abstract:
The purpose of this study was to investigate the effect of corruption on Foreign Direct Investment (FDI) in the Western Balkans countries, including Bosnia and Herzegovina, Croatia, Kosovo, Montenegro, North Macedonia, Serbia, and Albania. Secondary data from The World Bank, Transparency International, and International Monetary Fund databases were utilized to complete this study for 2012-2020. The built model of multiple linear regression included four independent variables, namely: Corruption Perception Index (CPI), Western Balkan Corruption Ranking (WBCR), Exchange Rate (EXG), and Inflation Rate (INFL), as well as FDI as a dependent variable, and data effects were analyzed through the SPPS scientific research software program. The results found that if CPI and WBCR were to increase by one unit, FDI would decrease by 0.088, namely 0.624, while if EXG and INFL were to increase by one unit, FDI would increase by 0.165, namely 0.236. In order to fight corruption and potentially attract more foreign direct investment, the governments of these countries should work to harmonize their anti-corruption laws with those of the European Union. In order to prevent the negative consequences of FDI inflows, they should also maintain a balanced rate of inflation, which entails stabilizing exchange rate fluctuations.
Topic:
Corruption, Foreign Direct Investment, Exchange Rate Policy, and Inflation
Political Geography:
Eastern Europe and Balkans

2. Exchange Rate Pass-Around

Author:
Matthieu Crozet, Julian Hinz, and Federico Trionfetti
Publication Date:
04-2023
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
In January 2015, The Swiss Franc (CHF) appreciated unexpectedly against the Euro by approximately 15%. We document a new fact: French firms that exported to both the Swiss market and the Eurozone also exhibited a sudden change in their export prices to the Eurozone. We coin this the “exchange rate pass-around” effect. We rationalise this fact with a simple model based on the endogenous decision of some firms to give up pricing-to-market and opt for single-pricing to all markets. An important implication of this finding is that single-pricing may be one of the causes of the incomplete pass-through. This mechanism has so far remained unexplored in the literature, which may have led to overestimating the importance of other factors. Based on monthly French export data, our empirical analysis confirms the existence of the pass-around. Firms directly affected by the CHF exchange rate shock increased their prices in neighboring markets by 0.8% compared to other exporters. The effect was stronger for firms with lower ex-ante price heterogeneity across markets and for firms with smaller trade costs to Switzerland. However, the effect was short-lived. As time passed, exporters tended to decouple the prices they set on the Swiss market from those for the Eurozone, and the pass-around effect faded.
Topic:
International Trade and Finance, Markets, Monetary Policy, European Union, and Exchange Rate Policy
Political Geography:
Europe

3. Exchange Rate Arrangements: Fix, Float, or Manage?

Author:
Nathaniel Cline, Carlos Schönerwald da Silva, and Matias Vernengo
Publication Date:
10-2023
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
The paper tries to provide a concise summary of the main debates on exchange rate arrangements. It a simple taxonomy of exchange rate arrangements, fixed, flexible and managed, and a brief analysis of the main debates about their advantages and disadvantages. It emphasizes the different policy objectives of mainstream and heterodox schools of thought, suggesting that they tend to be more relevant than the specific defense of one particular exchange rate arrangement. In that sense, there are divergences on their preferences within schools of thought. The paper also discusses the causes of currency crises and the role of the dollar in the international monetary system.
Topic:
Economics, Monetary Policy, Crisis Management, Exchange Rate Policy, and Currency
Political Geography:
Global Focus