Exchange Rate Manipulation Research Articles

Unravelling the Financial Crisis of Sri Lanka: Exploring Policy Blunders

This study explored the political-economic turmoil in Sri Lanka, with a focus on policy implementation. It delved into the dynamics of autocratic governance and elite control within the country's extractive systems, which had evolved over decades. Employing a case study methodology using data from authenticated published sources, this research unveils how ill-conceived policies, orchestrated by China-backed politicians and naïve administrators, primarily triggered the economic crisis. Mismanagement, policy missteps, and corruption fueled widespread social unrest and protests, culminating in the economic downturn. These policy blunders include tax reductions, bans on fertilizer and agrochemical imports, excessive currency printing, and exchange rate manipulation.

ВПЛИВ КОЛИВАННЯ ВАЛЮТНИХ КУРСІВ НА ЕФЕКТИВНОСТІ ФУНКЦІОНУВАННЯ СВІТОВОЇ ВАЛЮТНОЇ СИСТЕМИ

The article is devoted to the study of the impact of exchange rate fluctuations on the world monetary system in conditions of global turbulence and uncertainty. The modern world currency system is characterized by a number of problems caused by the inconsistency of currency policy, the devaluation of national currencies, which negatively affects international currency relations on a global scale. Therefore, the formation process and main elements of the world currency system were studied. Scientific approaches to defining the essence of the concept of "exchange rate" were analyzed and the functions of the exchange rate were considered. It was determined that the exchange rate is one of the most important elements of the functioning of both the national and the world monetary system, which in its essence is a peculiar form of the price of the monetary unit of one state, which is expressed in the monetary unit of another state. At the same time, it was found that exchange rate fluctuations contribute to international trade, balancing the balance of payments, increasing the volume of investment attraction and ensuring macroeconomic stability. The change in the exchange rates of the national currencies of the USA, Great Britain, Japan and Ukraine from 2017 to 2023 was analyzed. In addition to exchange rates, the following indicators of these countries were selected for analysis, such as: the balance of payments, the volume of exports and the volume of portfolio investments for 2017-2022. Considering the great importance of ensuring the effective functioning of the world monetary system, a number of ways were proposed to achieve this goal, in particular, ensuring the stability and transparent policy of central banks, international cooperation and coordination, monitoring and regulation of financial markets, transparency of information exchange, bans on manipulation of exchange rates, encouragement of innovation and development of new financial instruments. We believe that the implementation of the given recommendations will help to ensure the stable and efficient functioning of the world currency system. The impact of globalization processes on exchange rate fluctuations was also analyzed and the interaction and mutual influence between them was investigated. Important attention was paid to the activities of international organizations, such as the International Monetary Fund and the World Bank, and their participation in the regulation of exchange rates for the stabilization of the world economy, taking into account the impact of globalization on currency markets.

The Political Economy of American Exchange Rate Bill Voting: From the Perspective of RMB Appreciation

Abstract Under the theoretical framework of international trade political economy, this paper examines whether interest groups can dominate the voting of the US Exchange Rate Manipulation Act in 2015 from the perspective of RMB appreciation. Taking 100 senators as samples, this paper makes model estimation by using Full Information Maximum Likelihood Method (FIML), and quantitatively investigates the deep-seated driving factors behind the voting results of the US Exchange Rate Manipulation Act. The empirical results show that the influence of political donations from different interest groups on the voting behavior of parliamentarians is different. The political donations from American labor organization significantly affect the voting behavior of parliamentarians, but business groups and ideological organizations do not play a significant role in the voting results. In addition, senators’ personal characteristics affect the political donation of the bill to a certain extent, but do not affect the voting results. In the future, China needs to continuously pay attention to the latest progress of US exchange rate policy, correctly evaluate its impact on China’s economy, and maintain communication and coordination with important US interest groups to reduce the negative impact on related industries in China. JEL classification numbers: F14, F50, F31. Keywords: RMB Appreciation, Trade Protection, Bills Voting, Political Donation, Interest Group.

The Role of the International Monetary Fund After the 2008 Crisis

The purpose of this paper is to analyze the changes in the functions of the International Monetary Fund after the 2008 financial crisis. Following an extensive introduction concerning the subject of the study and which covers part of the economic literature, the focus was on governance reform and surveillance in the foreign exchange market. Finally, the empirical analysis was carried out concerning the manipulation of exchange rates in a period ranging from 2008-2016 and 15 countries (Taiwan, South Korea, Israel, China, Thailand, Macao, Switzerland, Hong Kong, Singapore, Norway, Qatar, United Arab Emirates, Kuwait, Trinidad and Tobago and Saudi Arabia) that in the period considered massively intervened in the foreign exchange market, keeping their respective currencies undervalued and acquiring an unfair competitive advantage to the detriment of partner economies. The results would tend to confirm that the manipulation of the exchange rate is a persistent and lasting element of the currency policies of the new millennium, highlighting an active insufficiency of the IMF’s action in the exercise of the oversight function on the currency policies of the Members.

Relationship between Exchange Rate and Gross Domestic Product in Nigeria ARDL Approach

Relationship between Exchange Rate and Gross Domestic Product in Nigeria ARDL Approach Idris Muhammad Idris, Baba Ali Ashemi and MohammedMusa Abstract This paper empirically investigates the relationship between exchange rate and the Gross Domestic Product (GDP) in Nigeria from 1981 to 2017. The annual data was obtained from CBN statistical bulletin. Using the Auto-Regressive Distributed Lag (ARDL) co-integration procedure. The result indicates that GDP in Nigeria is not responsive to official exchange rate movement. A long run relationship was found to exist between GDP and official exchange rate, but not statistically significant. The Error Correction Mechanism (ECM) estimate was rightly signed but was found to have a short-run disequilibrium adjustment of less than 2% for correcting any deviation from long-run equilibrium. The models are found not to have serial correlation and also found to be stable meaning that the result is appropriate for policy consideration. It is therefore suggested that policy makers should not totally rely on exchange rate manipulation as an instrument to boost the economy, but should consider other economic variables to strengthen the GDP. Full Text: PDF DOI: 10.15640/jeds.v7n3a6

The Population Age Structure, the Real Effective Exchange Rate and the Current Account Balance—Empirical Analysis Based on the Data of Chinese Provincial Panel

This paper takes the panel data of 29 provinces, municipalities and autonomous regions in China as samples from 1994 to 2015, using dynamic panel GMM to analyze the relationship between China’s population age structure, the real effective exchange rate and current account balance. System generalized method of moments and robustness test show that the adjustment of China’s current projects has obvious inertial characteristics; the change of population age structure has significant negative influence on the current account balance, the impact of youth dependency ratio on the current account is not significant, the elderly dependency ratio has a significant negative impact on current account; the effect of the real effective exchange rate on current account is not significant, the “Theory of Exchange Rate Manipulation in the Chinese Government” is not valid and untenable. The conclusion of this paper shows that the change of population age structure is an important reason for the long-term surplus of China’s current account.

The 'Missing Link' Between the WTO and the IMF

This article is part of a broader study on the impacts of exchange rate on trade. It searches for an explanation on why there is no effective rule in the World Trade Organization (WTO) to neutralize the negative impacts of currency misalignments on trade instruments. In other words, it searches for the missing link between the WTO and the International Monetary Fund (IMF) concerning the relationship between exchange rates and trade. It also seeks to demonstrate that, in the creation of the Bretton Woods system this link was clearly defined but was forgotten after the end of the par value. Despite all the historical and theoretical developments these two organizations have been through, their only legal link remains the same: General Agreement on Trade and Tariffs (GATT) Article XV. The article analyzes the differences between the IMF Article IV approach based on the concept of manipulation of exchange rates and the GATT Article XV approach that looks for the frustration of the trade objectives. Finally, it argues for the rescue of GATT Article XV to solve the serious problem of trade rules circumvention through currency misalignments.

The "Great Moderation" in a Dual Exchange Rate Regime

In the early nineties, the U.S. economy was emerging from a brief slump, monetary policy was easy, and economic activity recovered quickly during the decade, with GDP eventually reaching and then passing the consensus full employment level. Yet aggregate inflation remained surprisingly subdued. This moderation in prices at the aggregate level persuaded policy makers to allow the easy-money stance to continue in spite of the presence of inflation in non-tradables and in housing and construction in particular. This paper uses a flex-price, mixed-exchange rate model to examine some of the major contributing factors to economic developments in the two-decade period that ended in the financial meltdown and the great recession. It argues that Chinese exchange rate manipulation and China's preference for holding dollar reserves were important contributing factors. On the U.S. side, failure to understand the importance of differencial inflation patterns in tradables and non-tradables sectors, and especially failure to see inflation in housing and construction as goods rather than asset inflation, allowed monetary expansion to last much longer than it should have.

China Bashing: How Much? Who Does It? Has it Worked?

Many scholars in both the United States and China argue that a lot of the news stories about China published in major U.S. newspapers tend to have a negative slant. This tendency has generally been called “China bashing.” The purpose of this paper is threefold: (1) to quantify and measure the extent of this bashing, (2) to determine whether there are ideological reasons behind it, and (3) to assess whether the bashing has “worked” from the U.S. point of view (e.g. has it influenced the rate of appreciation of the Renminbi against the dollar?).To accomplish the first objective, I construct two China-bashing indices that track the incidence of news reported in the United States with a negative slant toward China. The first index tracks newspaper articles in major U.S. outlets containing one of the following “grievance” key phrases: “human rights,” “democracy,” “child labor,” “Tibet,” and “repression,” phrases that have persistently been associated with criticisms of China. I find that this index correlates well with opinion polls about China conducted in the United States, and the correlation suggests that the index is a meaningful measure of bashing. The second index tracks articles containing one or more of the following key phrases: “exchange rate manipulation,” “exchange rate manipulator,” “currency manipulation,” and “currency manipulator.” The indices, which span the 1990 to 2010 period, reveal that the composition of China-bashing in U.S. print media has shifted over time.While “human rights” bashing has declined somewhat, “currency manipulation” bashing has risen sharply. My estimates indicate that U.S. newspapers report news with a negative slant about China 130 to 150 percent as often as newspapers in other countries.To address the second objective I break down the “human rights” bashing index by the ideological slant of the newspaper. The results indicate that “liberal” newspapers bash China more intensely than “conservative” newspapers do, suggesting that ideology may be a relevant issue behind the bashing.Pertaining to the last objective – whether bashing has worked – the empirical results indicate that it has not. In fact, I find that currency-manipulation bashing appears to slow down, rather than accelerate, the rate at which the renminbi appreciates against the U.S. dollar. If the U.S. objective is to have China let the renminbi appreciate against the dollar, then the empirical results reported in this paper indicate that China bashing may actually be counterproductive.

Understanding the Sources of Friction in U.S.-China Trade Relations: The Exchange Rate Debate Diverts Attention Away from Optimum Adjustment

China has been accused exchange rate manipulation that has caused large U.S. trade deficits, which have reduced U.S. welfare by increasing unemployment and reducing wages. In addition, the strong claims by some observers that the trade imbalances are deeply deleterious to China's welfare almost make it a moral imperative for the United States to use tariffs to force an RMB appreciation for China’s own good. The truth, however, is that: - The claim that a 40 percent appreciation of the Renminbi (RMB) against the US$ would reduce the U.S. global trade deficit represents the triumph of hope over experience. When the average Yen-US$ exchange rate fell from 239 in 1985 to 128 in 1988, the U.S. global current account deficit only fell from 2.1 percent to 1.7 percent of GDP because Japanese companies started investing abroad and exported to the U.S. from there. For similar reasons, a large RMB appreciation would not reduce the U.S trade deficits significantly. - The claim that China’s swelling balance of payments surplus had caused the People’s Bank of China (PBC) to lose some control of credit growth is wrong. Chinese banks face credit quotas, and credit growth could not have stayed high in 2003-2007 without continual upward adjustments of the credit quotas by the PBC. The reason is not technical inability to control money growth but the political reality of factional politics. - The alleged negative effects on U.S. labor from the trade imbalances are greatly exaggerated. The average unemployment rate in 1999-06 was 5 percent compared to 6 percent in 1991-98; and the total compensation (including benefits) for blue-collar workers rose in the 1991-06 period. Beside accelerated globalization, accelerated technological innovation was another important trend in this period. The latter produced large productivity gains that enabled labor income to rise despite the greater competition from imports. These two trends caused more frequent job turnovers, which increased worker anxiety, and hence demand for protection. China’s current account surplus exists because its dysfunctional financial system cannot intermediate the growing savings into investments. The private savings rate is high because China does not have the variety of financial institutions that would, one, pool risks by providing medical insurance, pension insurance, and unemployment insurance; and, two, transform savings into education loans, housing loans, and other types of investment loans. The backward financial system in China has made the private savings rate in China 7.0 to 12.2 percentage points higher than in the U.S. The optimum solution to the present trade tensions is a policy package that emphasizes multilateral actions. It is bad economics and bad politics to focus on only one party (China alone must change), on only one instrument (RMB appreciation alone), and on only one policy objective (current account balance).

OUTPUT-FEEDBACK DISSIPATIVE CONTROL OF EXOTHERMIC CONTINUOUS REACTORS

Abstract Abstract The problem of controlling a (possibly open-loop unstable) continuous exothermic reactor with temperature measurements and manipulation of reactant feed and heat exchange rates is addressed within a passivity-dissipativity framework. The combination of a nonlinear passive state-feedback (SF) controller with a dissipative observer yields the dissipative output-feedback (OF) controller closed-loop stability conditions with: (i) the identification of the underlying gain-behavior interplay, and (ii) simple tuning guidelines. The approach is tested through numerical simulations, with a representative worst-case example: an exothermic reactor with Langmuir-Hinshelwood nonmonotonic kinetics, which must be regulated about an open-loop unstable steady-state which is not observable.

Understanding the Sources of Friction in U.S.–China Trade Relations: The Exchange Rate Debate Diverts Attention from Optimum Adjustment

China has been accused of exchange rate manipulation that has caused large U.S. trade deficits, which have reduced U.S. welfare by increasing unemployment and reducing wages. In fact, the strong claims by some observers that the trade imbalances are deeply deleterious to China's welfare almost make it a moral imperative for the United States to use tariffs to force an renminbi (RMB) appreciation for China's own good.

Facing Protectionism Generated by Trade Disputes: China's Post-WTO Blues

In present-day political and policy discussions in Washington, widespread concern is shared over the large and growing U.S.-China trade deficit. In the Senate, this concern was manifested in the proposed Currency Exchange Rate Oversight Reform Act of 2007, which was introduced in June 2007, and calls for designations and escalations to punish countries deemed to be guilty of exchange rate manipulation. Many other proposals to adjust, control or limit various elements of the U.S.-China trade relationship also exist, underscoring the belief that the U.S. economy suffers in some way from this trade relationship. More specifically, at the very base of these concerns lies the view that the large trade deficit has reduced U.S. welfare by increasing unemployment and reducing wages. Yet is this an accurate representation of the affect of current trade patterns with China on the U.S. economy? In order to determine the answer, in this paper we examine some of the economic issues associated with the large overall U.S. trade deficit (which, in 2006, was three and a half times larger than the bilateral U.S.-China trade deficit), and some of policy options in reducing U.S.-China economic tensions by posing and answering four critical questions.

Does austrian business cycle theory help explain the dot-com boom and bust?

Austrian business cycle theory, we contend, is essential to understanding the recent boom and bust cycle in the American (and, to a great extent, the global) economy. That does not mean that every recent macroeconomic event is explained by ABCT. For instance, exchange rate manipulation (e.g., the Reverse Plaza Accord) is not a part of standard ABCT, yet it played a key part in the global macroeconomic picture of recent years. However, as long as central banks continue to engage in episodic credit expansion, we believe that ABCT remains a vital component in the macroeconomist’s tool chest.

The effects of stocking density, water exchange rate, feeding frequency and grading on size hierarchy development in juvenile Nile tilapia, Oreochromis niloticus L.

The effects of stocking density and water exchange rate on size variation of juvenileOreochromis niloticus were studied. The fish subjected to the lowest stocking (0.5/L) and highest water exchange rate (20 times/hr) achieved the best (p < 0.05) final body weight. Exposure of fish to the highest stocking density (2/L) and lowest water exchange rate (5 times/hr) resulted in the poorest (p < 0.05) final body weight. The coefficient of variation of body weights of individuals subjected to the lowest and intermediate water exchange rates (5 and 10 times/hr, respectively) increased withincreasing stocking density (from 0.5 to 2 fish/L). Fish subjected to the highest water exchange rate (20/Times/hr) did not show a similar consistent trend. Water-borne stresses compounded by those resulting from crowding and/or competition for food was suggested as the primary causes of size variation within treatments. Manipulation of water exchange rates to improve water quality and hence minimize the adverse effects of crowding was suggested. The influences of stocking density,feeding frequency and grading on size hierarchy development were also investigated. Stocking density and feeding frequency had an effect on size hierarchy development. The coefficient of variation of body weights of fish fed least frequently (2 times/day) increased with increasing stocking density (from 0.5 to 2 fish/L). The two groups fed 3 and 4 times/day showed an inverse relationship. Size hierarchy in the homogeneous size distributions was observed to reestablish within two weeks and increased steadily thereafter, whilst in the non-graded group (mixed group), a steadyreduction in size variation was noted with time.

THE EFFECTS OF STOCKING DENSITY, WATER EXCHANGE RATE, FEEDING FREQUENCY AND GRADING ON SIZE HIERARCHY DEVELOPMENT IN JUVENILE NILE TILAPIA, OREOCHROMIS NILOTICUS L.

The effects of stocking density and water exchange rate on size variation of juvenileOreochromis niloticus were studied. The fish subjected to the lowest stocking (0.5/L) and highest water exchange rate (20 times/hr) achieved the best (p < 0.05) final body weight. Exposure of fish to the highest stocking density (2/L) and lowest water exchange rate (5 times/hr) resulted in the poorest (p < 0.05) final body weight. The coefficient of variation of body weights of individuals subjected to the lowest and intermediate water exchange rates (5 and 10 times/hr, respectively) increased withincreasing stocking density (from 0.5 to 2 fish/L). Fish subjected to the highest water exchange rate (20/Times/hr) did not show a similar consistent trend. Water-borne stresses compounded by those resulting from crowding and/or competition for food was suggested as the primary causes of size variation within treatments. Manipulation of water exchange rates to improve water quality and hence minimize the adverse effects of crowding was suggested. The influences of stocking density,feeding frequency and grading on size hierarchy development were also investigated. Stocking density and feeding frequency had an effect on size hierarchy development. The coefficient of variation of body weights of fish fed least frequently (2 times/day) increased with increasing stocking density (from 0.5 to 2 fish/L). The two groups fed 3 and 4 times/day showed an inverse relationship. Size hierarchy in the homogeneous size distributions was observed to reestablish within two weeks and increased steadily thereafter, whilst in the non-graded group (mixed group), a steadyreduction in size variation was noted with time.

A Discussion of Protectionist Trade Policies in the USA, Japan and Korea

Part I provides an introduction and overview and discusses topics such as the present state of Japanese-American trade policy, the trade deficit mentality, antidumping laws, auto industry protection, exchange rate manipulation, Super 301 and the hypocrisy of the United States position. Part II discusses the present Korean-American trade policy and includes issues such as U.S. trade barriers to Korean exports, tariffs, quantitative restrictions, antidumping and antisubsidy duties and Korean protectionism. Part III presents conclusions.

Must protectionism always violate rights?

Explores the question of whether protectionist policies must always violate someone’s rights, or whether it is possible to have a protectionist policy that does not violate rights. Discusses the weaknesses of a utilitarian approach to trade theory, then goes on to examine the major forms of protectionism, including tariffs, quotas, anti‐dumping laws, and the deliberate manipulation of exchange rates. Discusses rights and makes a distinction between positive and negative rights. Applies rights theory to trade policy and concludes that protectionism necessarily violates someone’s rights to property, contract or association ‐ unless it is done on a voluntary basis.

Degré de flexibilité des marchés du travail, ajustement à des chocs asymétriques et union monétaire européenne

Labour Market Flexibility, Adjustment to Asymmetric Shocks and European Monetary Union by Hélène Erkel-Rousse In 1961, Mundell posited that regions would have no major problems adjusting to monetary union provided that the shocks they sustained were not very asymmetric and their labour markets were sufficiently flexible. The European Union does not appear to perfectly satisfy these two conditions and the member countries could consequently have problems adjusting to monetary union. However, Mundell's claim should not be taken at face value. First of all, labour market flexibility is just one adjustment element among others. Secondly, the importance accorded to the extent of shock asymmetry is moderated by the fact that the manipulation of exchange rates is not as easy and beneficial as Mundell suggests.

Notions of ‘Success’ in General Management

It is surely significant that the title of this paper deals in vague terms such as notions, and that in line with true Health Service caution, the idea of success is hedged with appropriate punctuation. It is almost inconceivable that a similar evaluation of general management in the private sector would be so constrained and tentative. No doubt this largely reflects the imperatives of the balance sheet and the ‘cash nexus’ which provide a ready means of assessing managerial competence by reference to objective and absolute criteria. A separate analysis of general management in the private sector might nevertheless conclude that ‘success’ is achieved as much by political intervention and the manipulation of exchange rates, as it is by managerial performance. Certainly, it has always struck me that the epitomes of good management, so persuasively presented in ‘In Search of Excellence’ and so eagerly consumed by the new generation of Health Service Managers, might not stand up to the kind of microscopic scrutiny so commonplace in the Health Service. It would be interesting, for example, to ask the Scottish workforce of the Caterpillar Corporation whether that company's place in the ‘Excellence’ Hall of Fame accorded with their perceptions!