Growth from international capital flows: The role of volatility regimes

Ashoka Mody, Antu Panini Murshid, 27 November 2011

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In a recent survey, Kose et al (2006) find little robust evidence for long-run growth benefits from global capital inflows. Prasad et al (2006) go a step further.

Topics: International finance, International trade
Tags: capital flows, uncertainty, volatility

On the tradeoff between growth and stability: The role of financial markets

Alexander Popov, Frank Smets, 3 November 2011

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In the two decades leading to the Great Recession, academics had mostly converged on Schumpeter’s view that well-developed financial systems play a crucial role in stimulating economic growth.

Topics: Financial markets
Tags: Finance, growth, macroprudential regulation, volatility

The risk in carry trades

Lukas Menkhoff, Lucio Sarno, Maik Schmeling, Andreas Schrimpf, 23 March 2011

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The “carry trade” is the most popular trading strategy in currency markets. Traders borrow in currencies with low interest rates (negative forward premium) and invest in currencies with high interest rates (positive forward premium), profiting from the margin. Yet according to the uncovered interest parity this strategy should not work.

Topics: Exchange rates, International finance
Tags: carry trade, exchange rates, speculation, volatility

Does openness increase volatility? Not if countries are sufficiently diversified

Mona Haddad, Jamus Lim, Christian Saborowski, 21 March 2010

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The epicentre of the global economic crisis was the financial markets of the industrialised world, yet developing countries have felt the tremors. Many, including those without close financial ties to the developed world, were driven into recession as global demand plummeted and the largest drop in global trade volumes since the Second World War ensued.

Topics: Development, International trade
Tags: diversification, openness, volatility

The oil price and the macroeconomy: What’s going on?

Olivier Blanchard, Marianna Riggi, 7 December 2009

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Whereas in the 1970s large increases in the price of oil were associated with sharp decreases in output and large increases in inflation, in the 2000s, and at least until the end of 2007, even larger increases in the price of oil were associated with much milder movements in output and inflation. What has happened to the oil-macroeconomy relationship?

Topics: Energy, Macroeconomic policy
Tags: expectations, oil shocks, volatility

Democracy, diversification, and growth reversals

David Cuberes, Michal Jerzmanowski, 15 August 2009

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The last twenty-five years have been a period of remarkable stability among developed economies. This stability, termed by some “The Great Moderation”, has been particularly noteworthy in its contrast with the instability experienced by developing economies. Poor countries suffer not only from persistently low incomes but also from large doses of economic volatility.

Topics: Development
Tags: democracy, diversification, growth, volatility

Financial factors and the current account: Is volatility a concern?

Rebecca Hellerstein, Cédric Tille, 21 August 2008

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The surge in financial globalisation constitutes one of the major developments in the world economy since the mid-1990s, with Lane and Milesi-Ferretti (2007) documenting a large rise in most countries’ holdings of external assets and liabilities.

Topics: International finance
Tags: Current account balance, financial globalisation, volatility

Can we predict exchange rates? Economic evidence against the random walk model

Pasquale Della Corte, Lucio Sarno, Ilias Tsiakas, 18 January 2008

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Exchange rates are important to innumerable economic activities. Tourists care about the value of their home currency abroad. Investors care about the effect of exchange rate fluctuations on their international portfolios.

Topics: Exchange rates
Tags: exchange rates, forward premium, predictions, random walk, volatility

International Financial Stability

Roger W. Ferguson. Jr., Philipp Hartmann, Fabio Panetta, Richard Portes, 15 November 2007

URL: http://www.cepr.org/pubs/books/CEPR/booklist.asp?cvno=P183
Topics: Financial markets
Tags: financial stability, global imbalances, hedge funds, subprime crisis, volatility

Regulating the international financial system: towards a more balanced, market-based model

Richard Portes, 15 November 2007

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The global financial system shows signs of stress, but why should policy-makers care?

Topics: Financial markets
Tags: buy and hold, carry trade, financial stability, global imbalances, hedge funds, large complex financial institutions, originate to distribute, ratings, strutured finance, subprime crisis, tail risk, volatility

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