Exchange Rates in Developed and Emerging Markets: Practices, Challenges and Economic Implications

Mohsen Bahmani-Oskooee, PhD (Editor)
Department of Economics, The University of Wisconsin-Milwaukee, Milwaukee, WI, USA

Series: Economic Issues, Problems and Perspectives
BISAC: BUS022000

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Exchange rate is perhaps one of the most important macroeconomic variables that link the economy of one country with the rest of the world. When it changes, it affects almost all other sectors and many other macro variables. For example, when a country’s currency depreciates, its exports become cheaper in terms of foreign currency and imports more expensive in terms of domestic currency. By exporting more and importing less, the trade balance is improved. Or when domestic currency depreciates (foreign currency appreciates), domestic currency value of foreign assets held by domestic residents increases. If this increase is perceived as an increase in wealth, domestic residents could increase their consumption at home. This leads to an increase in demand for money.

However, if there are expectations of further appreciation of foreign currency, they may hold more foreign currency and less domestic currency. Other channels through which currency depreciation affects domestic consumption is through the redistribution effect. Depreciation is inflationary. Since wages do not adjust to inflation instantaneously, profit will be realized at the cost of workers. This amounts to transferring income from workers to producers. Since workers have a high propensity to consumers than producers, eventually domestic consumption declines. Other variables that are said to be affected by exchange rate changes include domestic investment, income distribution, the stock market, etc. This book deals with economic implications of exchange rate changes in emerging economies pertaining to some of the issues mentioned above. (Imprint: Nova)

Preface pp. i-vi

Chapter 1. Exchange Rate Volatility and the Demand for Money in China
(Mohsen Bahmani-Oskooee, Sahar Bahmani and Dan Xi, Department of Economics, The University of Wisconsin-Milwaukee, Milwaukee, WI, USA, and others)pp. 1-10

Chapter 2. Exchange Rate Dynamics, Speculation and Localization of Monetary Policy
(Gregory Gagnon, Department of Economics, University of Toronto Mississauga, Mississauga, Ontario, Canada)pp. 11-40

Chapter 3. Which Korean Industry will Benefit from the Weakening Won?
(Mohsen Bahmani-Oskooee and Ruixin Zhang, Department of Economics, The University of Wisconsin-Milwaukee, Milwaukee, WI, USA)pp. 41-58

Chapter 4. A Microstructural Effect of Japanese Official Intervention in the Yen/Dollar Foreign Exchange Market
(Hiroya Akiba, Yoshihiro Kitamura, Shinichi Matsuda and Ayano Sato, Waseda University, Tokyo, Japan, and others)pp. 59-74

Chapter 5. Dual-Currency System as a Way to Relieve the Crisis of Some Euro Zone Countries
(Adam Koronowski, Institute Corona Mariae, Poland)pp. 75-88

Chapter 6. Do Nominal Devaluations Lead to Real Devaluations? Evidence from Emerging Economies
(Mohsen Bahmani-Oskooee and Sahar Bahmani, Department of Economics, The University of Wisconsin-Milwaukee, Milwaukee, WI, USA, and others)pp. 89-98

Chapter 7. Foreign Exchange Rates and Stock Prices: Evidence from Major African Markets
(Odongo Kodongo and Kalu Ojah, Department of Business Studies, Jomo Kenyatta University of Agriculture and Technology, Nairobi Kenya, and others)pp. 99-126

Chapter 8. On the Optimal Exchange Rate Policy for the GCC Countries
(Almukhtar Al-Abri, Department of Economics and Finance, Sultan Qaboos University, Alkodh, Oman)pp. 127-154

Chapter 9. The Effects of Central Banks’ Independence on Inflation Outcomes in Emerging Countries: Does the Choice of Exchange Regime Matter?
(Jamal Bouoiyour and Refk Selmi, CATT, Center of analysis and processing of data, Department of International Economics, University of Pau, France, and others)pp. 155-180

Chapter 10. Is There a Scope to Capitalize on Exchange Rate Fluctuations? Evidence for Iran
(Magda Kandil and Ida A. Mirzaie, Western Hemisphere Department,
International Monetary Fund, Washington, D.C., USA)pp. 181-200

Chapter 11. Remittances and Equilibrium Real Exchange Rates in Emerging and Small Open Countries
(Serge Rey and Elisa Dienesch, CATT, University of Pau, France)pp. 201-222

Chapter 12. The Rial-Dollar Rate: Does it Revert to Its Mean?
(Mohsen Bahmani-Oskooee and Sahar Bahmani, Department of Economics, The University of Wisconsin-Milwaukee, Milwaukee, WI, USA, and others)pp. 223-232

Index pp. 233-240

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