Exchange Rate Volatility and Reserves Transparency

Cady, John F.; González-García, Jesús

doi:10.1057/palgrave.imfsp.9450025

Cited by 22 publications

(12 citation statements)

References 14 publications

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“…The literature has voluminous studies on the determinants of exchange rate due to its vital role in country’s prosperity but most of the existing studies utilize cross-country data (Amor et al, 2008; Cady & Garcia, 2007; Edwards, 1987; Joyce & Kamas, 2003; Odedokun, 1997). 2 Panel data are helpful in getting answers in a broader way but it lacks specification.…”

Section: Motivation Of the Studymentioning

confidence: 99%

Determinants of Exchange Rate in Pakistan: Revisited with Structural Break Testing

Raza

Afshan

2017

Global Business Review

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This study examines the determinants of exchange rate in Pakistan by using the time-series data from 1972 to 2013. The results of the autoregressive distributed lag bound testing co-integration approach, the Johansen and Juselius co-integration approach and the Gregory and Hansen structural break co-integration approach confirm the significant long-run relationship between a few considered variables. The estimations of the long run indicate a significant negative association of exchange rates with terms of trade, trade openness and economic growth. However, money supply and inflation rate have a positive and significant effect on exchange rates. The outcomes of the error correction model suggest the negative and significant relationship of the terms of trade and trade openness on exchange rates of Pakistan in the short run. However, all other variables are found insignificant in the short run. The Granger causality test confirms the presence of a bidirectional causal relationship of the exchange rate with economics growth and trade openness in Pakistan. However, the inflation, money supply and terms of trade possess the unidirectional causality which runs from the explanatory variable to the exchange rate of the country. The present study may guide policymakers in formulating conclusive monetary and fiscal policies to ascertain the less volatile and productive exchange rate for Pakistan to attain sustainable economic growth for a long span of time.

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Section: Motivation Of the Studymentioning

confidence: 99%

Determinants of Exchange Rate in Pakistan: Revisited with Structural Break Testing

Raza

Afshan

2017

Global Business Review

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“…Transparency builds trust in government and democracy (Rose and Haerpfer, 1995), enhances confidence in a country's economy, and leads to greater economic prosperity and political stability. Cady and Gonzalez-Garcia (2007) found that the dissemination of data on the liquidity of foreign currency reduces the volatility of exchange rates because it allows actors in the market to assess the overall macroeconomic situation. Similarly, Gelos and Wei (2005) argued that transparency encourages greater foreign investment, suggesting that it is a crucial component of a country's integration into global markets and, by implication, of national development.…”

Section: Transparency As a Functional Imperativementioning

confidence: 99%

National transparency: Global trends and national variations

Jang

Cho

Drori

2014

International Journal of Comparative Sociology

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Nation-states worldwide are institutionalizing a culture of transparency and accountability. In our analyses of data reported in the United Nations (UN) Statistical Yearbooks since 1970, we identify two main trends: (1) national governments are providing a greater amount of data on a larger set of social, political, and economic domains, and (2) national governments increasingly offer such data in accordance with international standards introduced by the UN. In addition, we find that the overall cross-national trend toward transparency and accountability, as measured by the standard reporting of national accounts to the UN from 1970 to 2000, is driven by a unique set of factors in each time period. Specifically, domestic and economic conditions drove the trend toward transparency before 1990, whereas political factors have driven transparency since then. Throughout the period studied, the presence of links between a given country and world society has increased the likelihood that it will engage in transparent reporting. We conclude that active networking with international governmental organizations, such as the UN, teaches governments the norm of transparency, inculcating them with the rationales of public accountability and proper governance.

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“…SeeBayoumi and Eichengreen (1998),Cady and Gonzalez-Garcia (2007), andDevereux and Lane (2003) for modeling the nominal exchange rate volatility. International reserves and their asymmetric stabilizing impacts were not examined in these studies.…”

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confidence: 99%

Asymmetric stabilizing impact of international reserves

Lee

Kim

2018

Applied Economics Letters

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This paper proposes a panel fixed-effect threshold model to study how different levels of international reserves contribute to stabilizing the exchange rates in emerging market economies. Our model identifies a reserve-to-debt threshold ratio after which the marginal stabilizing effect of reserves begins to fall during tranquil times. Such diminishing returns, however, do not appear to exist even at the excessive level of reserves during the recent global financial crisis. These results call for deeper international macro cooperation through reserve pooling or swap arrangements to enhance efficiency of reserve management.

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Exchange Rate Volatility and Reserves Transparency

Cited by 22 publications

References 14 publications

Determinants of Exchange Rate in Pakistan: Revisited with Structural Break Testing

Determinants of Exchange Rate in Pakistan: Revisited with Structural Break Testing

National transparency: Global trends and national variations

Asymmetric stabilizing impact of international reserves

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