1 / 14

MONETARY ECONOMICS

MONETARY ECONOMICS. EXCHANGE RATE REGIMES. Content. Short History of the International Monetary System Fixed vs Flexible Exchange Rates Optimal Currency Area Issues: - Trilemma ( Forssbaeck and Oxelheim , 2006) - Gold Dinar as a common currency of OIC countries?

magnar
Download Presentation

MONETARY ECONOMICS

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. MONETARY ECONOMICS EXCHANGE RATE REGIMES

  2. Content Short History of the International Monetary System Fixed vs Flexible Exchange Rates Optimal Currency Area Issues: - Trilemma (Forssbaeck and Oxelheim, 2006) - Gold Dinar as a common currency of OIC countries? - Can Interest Rate policy be used to defend falling exchange rate?

  3. History of International Monetary System 1880s – WWI: Gold Standard - Every country at fixed e-rate with gold. WWI – 1940s: Interwar Gold-Exchange and Dirty Float - WW I: countries printed money - later, returning to old parity was too hard (too much contraction needed). - UK did return to gold. - Others pegged to a mixture of gold and foreign exchange. - Overall, failed attempts to restore credibility of the gold standard. - 1930s & Great Depression: most countries abandoned their pegs.

  4. History of International Monetary System 1945-1971: Bretton Woods - dollar pegs to gold & other countries peg to the dollar - US plays central role: monetary policy affects all other countries - 1960s: dollar depreciation  countries request gold  US lost gold reserves  1971 Nixon closed the gold window. 1970s: Floating Exchange rates, oil shocks and stagflation 1979: ERM in Europe and eventually EURO in 1999 1980s --: Developed: free or managed floats Developing: fixed-exchange rates for stability and credibility

  5. Fixed Exchange Rate Regime

  6. Fixed Exchange Rate Regime

  7. Fixed Exchange Rate Regime

  8. Fixed versus Flexible

  9. Impossible Trilemma

  10. Common Currency Area

  11. THE EURO….

  12. Maastricht Criteria 1991

  13. EU Countries

  14. DISCUSSION OF ISSUES Trilemma (Forssbaeck and Oxelheim, 2006) Gold Dinar as a common currency in OIC Countries? Lee, G. H. Y. (2011), Gold Dinar for the Islamic Countries? Economic Modeling, 28, 1573-1586. Can Interest Rate be used to defend falling exchange rate? Dekle, R., Hsiao, C. and S. Wang, (2002), “High Interest Rates and Exchange Rate Stabilization in Korea, Malaysia, and Thailand: An Empirical Investigation of the Traditional and Revisionist Views,” Review of nternational Economics, 10(1), 64-78.

More Related