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JEL codes: F41, H32, L11 1. INTRODUCTION In recent decades, fiscal policy has emerged as a pivotal instrument for governments worldwide to stimulate economic growth and maintain stability. Fiscal policy [...]

In this paper, we highlight a new channel through which dollar fluctuations can become a self-fulfilling pro-cyclical force. We call this mechanism Imperial Circle as it makes the dollar the dominant macroeconomic variable in the context of the current international monetary system. At the core of it, there is a fundamental asymmetry between the shrinking exposure of the 'real' US economy to global developments versus the growing global role of the US dollar. Dollar appreciation leads to a decline in global economic activity, which in turn benefits, in relative terms, the dollar itself, reinforcing the initial appreciation and its effects. JEL Classification E32 * E44 * F41, 1 Introduction The influence of the dollar within the international monetary system has been the subject of extensive studies, both in recent times and historically. The objective of this research [...]

There is clear scientific evidence of the shift in the probability distribution of climate-related disasters in recent decades. Is this shift reflected in the behavior of forward-looking measures of economic activity such as real exchange rates? I evaluate the role of different belief formation assumptions on the ability of the model to predict the response of real exchange rates to climate-related disasters. I consider Bayesian and backward-looking belief updates as well as static beliefs with no update or a one-time update. To do so, I construct a version of the Farhi-Gabaix (2015) framework augmented with explicit belief formation. I use two approaches to model calibration and simulate the model for 47 countries for 1964-2019 using actual data for climate-related disasters. I find that in general differences in belief formation do not have much effect on the model fit because the productivity loss component dominates the predicted response. Specifically, I find that even in recent years there is no evidence of Bayesian beliefs being a better fit for the data. JEL Classification F21 * F23 * F64, 1 Introduction It is well established that physical risks of climate change are becoming more apparent, more severe, and more frequent (Stott, 2016). The magnitudes of damages from climate change-related [...]

Global machine tool production was fairly stable while consumption fell some 5% across the top 50 industrialized countries in 2023. Specifically, overall machine tool consumption decreased from $83.0 billion (B) [...]

Byline: Juhi Bansal A recent Supreme Court judgment offers valuable clarity and guidance for parties involved in the enforcement of foreign arbitral awards in India. The Supreme Court of India, [...]

(https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgnEBr_SeAOftri_4UIU4Wj4xBdBdspu-H_8qA9iC5z7W0xaC5Nmyo6pcZXXRpyFVCFOXELmTQ4UAFdM0K9XWY9ntW6fGhUaoIc5CGzY7yQqYyGFlwloap7fbyckv5xZb7eIr8RE6QzTOOkVGZpJH5R2tTEE1VJ0CBHb0DWe_-l-fjiPX5dAsHlbG0y6Hxt/s712/Thurs.png) Overview: The dollar's surge continues. Most G10 currencies are off 0.45%-0.65%. The US dollar is trading above CAD1.40 for the first time since the pandemic, but the Canadian dollar [...]

FX Action: the DXY dollar index is slightly higher on the day and currently trading at 104.433. The dollar saw large swings through yesterday's session, as Middle East jitters eased [...]

The company said, 'Taking into consideration recent trends in the business and the global economy, continued double-digit quarterly earnings growth, and historical seasonal patterns, the Company remains confident in its [...]

Key Highlights: * Factors influencing the decision include Israels claim not to attack Iranian oil facilities, easing concerns about crude oil supply disruption, and IEAs forecast of global crude oil [...]

AFTER THE collapse of the Bretton Woods system of fixed exchange rates in 1973 the prestige of the dollar looked gutted. America had devalued its currency twice in scarcely a [...]

Land area 36,125 sq km Population 2.12m (IMF, 2023) Main towns Population in '000s (World Population Review estimates, 2022) Bissau (capital): 388,028 Bafatá: 22,521 Gabú: 14,430 Bissora: 12,688 Weather in [...]

(https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj3hP_99SSiYpTHgnwFqxYGBZTJ3JTkPuMUj2IbjCfbusnj_d33TrvZGx8Ovasrpla50utgBBG17cfG_LBo076xZqTJ9BbcKfer_otu5WRk55sf9CZEW-11U6Bxu_SeC_4tYaRYV5P6Kzwm9fbJzQrPrynQvOczqSLyTTCFxlwJICestJNk0h2WvJH4Kegm/s680/japan%20.png) Overview: Japan's LDP leadership selection has not been the dragged-out affair that many thought likely with a record nine candidate vying for the post. It turns out that the [...]

(https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgQ1feAVg80ZHnkGZ19DPw3ZJH8SLWCJtYJz-jnXGa3UbV8hLmxoMLSGGavlaa01kl8mo6vx_pIVBsUuql445-FU2su1iYmW05VwXN797VunV0FXMpouzBObYIQc7OF4txVxDhWkYHOG8v4PkHRRJRIKhWwBeRUtvqnekJKdu0CViBF56GpTypm1b9t32Bk/s691/CPI.png) Overview: The US 10-year yield is lower for the eighth consecutive session. The yield was near 3.90% at the end of August. It is now flirting with 3.60%. The [...]

Monetary policy is focused on managing inflation (with an official target of 3%) and is nominally committed to a free-floating exchange rate. However, as a big part of Georgia's inflation [...]

Fuel and food subsidies will limit local inflationary pressures throughout 2024-25. However, a gradual rollback of these subsidies, along with the expected devaluation of the boliviano in 2026, means that [...]

The NBK operates a floating exchange rate. Movements of the tenge are partly driven by shifts in global oil prices and the Russian rouble, owing to a high level of [...]

The Mauritius rupee generally tracks the euro-US dollar rate-as much of Mauritius's export earnings are euro-denominated-but is also affected by large volumes of net portfolio flows. Mauritius's negative interest-rate differential [...]

The Central Bank of Barbados (CBB) is working with the Fund to fine-tune monetary policy. Barbados's fixed exchange rate and long-standing capital controls shelter the economy from the effects of [...]

Dollarisation is well established and will be retained. The US dollar will soften slightly in 2024-28 as the Fed moves towards a neutral monetary policy stance, but the dominance of [...]

The CBA has kept the manat fixed at Manat1.7:US$1 since April 2017. Although the central bank claims to be moving towards a free-floating exchange rate, this has not materialised and [...]

On July 31st the Central Bank of Azerbaijan (CBA) maintained the policy rate at 7.25%. Inflation accelerated slightly in the first quarter of 2024 but gradually slowed in the second [...]

I study the social efficiency and aggregate effects of equity home bias using a general equilibrium model with nominal rigidities and a fixed exchange rate. I find that the source of home bias is key for analyzing the wedge between equilibrium and socially optimal levels of home bias. Surprisingly, when home bias is due to labor income hedging effects, stock positions tend to be approximately efficient despite the aggregate demand externalities induced by the rigidities. On the other hand, home stock positions are excessive when home bias is due to financial frictions or biased expectations. The key theoretical results hold numerically well in a more general quantitative model., 1 Introduction Should a currency union promote the holdings of foreign equity? This paper argues that the answer depends crucially on the cause of home bias. Home bias and the [...]

Enhancing Creditworthiness with Bitcoin in a Debt-Intensive Economy Since US President Richard Nixon announced in 1971 that the US dollar would no longer be convertible into gold at a fixed [...]

Imported commodities and food are the main drivers of local inflation (Bolivia is a net goods importer). However, food and fuel subsidies, as well as the overvalued fixed exchange rate, [...]

The NBK operates a floating exchange rate. The tenge's movements partly reflect shifts in global oil prices and the Russian rouble, owing to a high level of mutual trade. We [...]

The CBA has kept the manat fixed at Manat1.7:US$1 since April 2017. Although the central bank claims to be moving towards a free-floating exchange rate, this has not materialised and [...]

On July 1st the Central Bank of Azerbaijan (CBA) maintained the policy rate at 7.25% after five consecutive cuts. Inflation has been slowing since April 2023 but accelerated slightly in [...]

McDonald's owed its early success to zealous pickiness. Other restaurant chains in the 1960s had similar rules for food preparation and cleanliness. But none enforced them as rigorously, according to [...]

Dollarisation is well established and will be retained. The US dollar will soften slightly in 2024-28 as the Fed moves towards a neutral monetary policy stance, but the dominance of [...]

Belize is a small, open economy with a fixed exchange rate to the US dollar, meaning that any moves by the Federal Reserve (Fed, the US central bank) strongly influence [...]

The Bahamian dollar has been pegged to the US dollar at B$1:US$1 since 1973 and will remain so, as commitment to the fixed exchange rate is strong. Net foreign reserves [...]

New Caledonia does not have an independent monetary policy, as a consequence of the fixed exchange rate between the French Pacific franc and the euro. The territory's policy interest rates [...]

The NBK operates a floating exchange rate. The tenge's movements partly reflect shifts in global oil prices and the Russian rouble, owing to a high level of mutual trade. We [...]

Land area 112,622 sq km Population 13.7m (UN estimate, 2023) Main towns Population in '000 (2021 World Gazetteer estimates) Cotonou: 780.0 Abomey-Calavi: 385.8 Djougou: 237.0 Porto Novo (capital): 234.2 Climate [...]

The CBA has kept the manat fixed at Manat1.7:US$1 since April 2017. Although the CBA claims to be moving towards a free-floating exchange rate, this has not materialised and is [...]

On June 24th the Central Bank of Azerbaijan (CBA) maintained the policy rate at 7.25% after five consecutive cuts. Inflation has been slowing since April 2023 but accelerated slightly in [...]

Land area 56,785 sq km Population 8.7m (2022; UN) Main towns Population ('000; 2017; World Gazetteer) Lomé (capital): 2,133 Kara: 108 Sokodé: 104 Kpalimé: 84 Atakpamé: 77 Climate Tropical, drier [...]

Dollarisation is well established and will be retained. The US dollar will soften slightly in 2024-28 as the Fed moves towards a neutral monetary policy stance, but the dominance of [...]

Inflation in Bolivia is driven mainly by imported commodities and food, and by currency movements. As a net goods importer, Bolivia is exposed to global inflationary pressures, but food and [...]

The BCRA is pursuing a crawling-peg regime, under which monthly devaluation is pegged at 2%. The government has committed to maintain this rate, despite peso appreciation in real, trade-weighted terms. [...]

Land area 36,125 sq km Population 2.12m (IMF, 2023) Main towns Population in '000s (World Population Review estimates, 2022) Bissau (capital): 388,028 Bafatá: 22,521 Gabú: 14,430 Bissora: 12,688 Weather in [...]

Monetary policy is focused on managing inflation (with an official target of 3%) and is nominally committed to a free-floating exchange rate. However, as a big part of Georgia's inflation [...]

Inflation in Bolivia is driven mainly by imported commodities and food, and by currency movements. As a net goods importer, Bolivia is exposed to global inflationary pressures, but food and [...]

We expect the authorities to resume monetary reform cautiously this year, following setbacks related to the January 2021 currency unification. This reform involved replacing the dual-currency system with a single [...]

The CBA has kept the manat fixed at Manat1.7:US$1 since April 2017. Although the CBA claims to be moving towards a free-floating exchange rate, this has not materialised and is [...]

On May 1st the Central Bank of Azerbaijan (CBA) announced another reduction in its refinancing rate, from 7.5% to 7.25%. This rate cut of 25 basis points is the fifth [...]