Nominal Currency Research Articles

The effects of real exchange rate depreciation on stochastic producer prices in low-income agriculture

Abstract This paper considers the effects of real exchange rate depreciation on stochastic agricultural producer prices in low-income agriculture. Conventional wisdom, that real depreciation achieved through nominal currency devaluation stimulates tradables production, does not universally hold in the presence of stochastic prices. In fact, real depreciation is only stimulative in two cases – importables that remain importable and nontradables that become exportable. GARCH estimation of time-series price data on several commodities from Madagascar support the hypotheses generated by the analytical model.

Returns to Japanese investors from US investments

This paper provides the first detailed measures of losses to Japanese investors from US investments. Over the period 1977–1994, nominal currency losses from Japanese investments amounted to about $260 billion. However, these losses should rather be measured on an opportunity cost basis, i.e. in terms of foregone opportunities in the Japanese market. Using this benchmark, economic currency losses still amounted to about $200 billion. These losses were primarily caused by the sustained appreciation of the yen, which was associated with massive US-Japan bilateral trade deficits.

Capital Inflows and Policy Responses in the AsEAN Region

This paper reviews the experience of four ASEAN countries in dealing with an unprecedently strong influx of foreign capital in the late 1980s and early 1990s. While there was some increase in inflation associated with the inflows, it was relatively minor, and real exchange rates did not appreciate. Countries responded in the first instance by using open market operations for sterilized intervention. Subsequently, the fiscal stance was tightened. There was reluctance to allow nominal currency appreciation and, with one exception, controls on capital inflows were avoided.

On Measuring the Loss during Periods of Inflation from Holding Assets Denominated in a Nominal Currency

On Measuring the Loss during Periods of Inflation from Holding Assets Denominated in a Nominal Currency