Financial Globalization and Exchange Rates
Philip R. Lane
University of Dublin - Department of Economics; Centre for Economic Policy Research (CEPR)
Gian Maria Milesi-Ferretti
International Monetary Fund (IMF); National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)
IMF Working Paper No. 05/3
The founders of the Bretton Woods System 60 years ago were primarily concerned with orderly exchange rate adjustment in a world economy that was characterized by widespread restrictions on international capital mobility. In contrast, the rapid pace of financial globalization during recent years poses new challenges for the international monetary system. In particular, large gross cross-holdings of foreign assets and liabilities mean that the valuation channel of exchange rate adjustment has grown in importance, relative to the traditional trade balance channel. Accordingly, this paper empirically explores some of the interconnections between financial globalization and exchange rate adjustment and discusses the policy implications.
Number of Pages in PDF File: 46
Keywords: Financial integration, capital flows, external assets and liabilities
JEL Classification: F31, F32working papers series
Date posted: February 15, 2006
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo8 in 0.719 seconds