Why is financial stability essential for key currencies in the international monetary system?

Linda Goldberg, Signe Krogstrup, John Lipsky, Hélène Rey 26 July 2014

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Could the dollar lose its status as the key international currency for international trade and international financial transactions, and if so, what would be the principal contributing factors? Speculation about this issue has long been abundant, and views diverse. After the introduction of the euro, there was much public debate about the euro displacing the dollar (Frankel 2008). The monitoring and analysis included in the ECB’s reports on “The International Role of the Euro” (e.g.

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Topics:  Financial markets International finance

Tags:  reserve currency, financial stability, dollar, capital flows, spillovers, Currency, SIFIs

Do capital controls deflect capital flows?

Paolo Giordani, Michele Ruta, Hans Weisfeld, Ling Zhu 23 June 2014

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The size and volatility of capital flows to developing countries have increased significantly in recent years (Figure 1), leading many economists to argue that national policies and multilateral institutions are needed to govern these flows (Forbes and Klein 2013, Blanchard and Ostry 2012). The IMF itself has reviewed its position on the liberalisation and management of capital flows, while recognising that “much further work remains to be done to improve policy coordination in the financial sector” (IMF 2012, p. 28).

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Topics:  International finance

Tags:  China, capital flows, spillovers, South Africa, capital controls, Brazil, Capital inflows, international capital flows

Spillovers from systemic bank defaults

Mark Mink, Jakob de Haan 24 May 2014

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Financial-crisis management and prevention policies often focus on mitigating spillovers from the default of systemically important banks. During the recent crisis, governments avoided large bank failures by insuring and purchasing intermediaries’ troubled assets, by providing them with capital injections, and even by outright nationalisations. After the crisis, financial regulators designed additional requirements for those institutions that the Financial Stability Board designated as globally systemically important banks (G-SIBs).

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Topics:  Financial markets

Tags:  financial stability, spillovers, regulation, banking, banks, systemic risk

The economic impact of inward FDI on the US

Theodore H. Moran, Lindsay Oldenski 04 March 2014

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The US is the second-largest recipient of FDI in the world, behind China, and by far the largest target for FDI among OECD countries (OECD 2013). The numbers are large ($253 billion for the US), and the gap with the next-largest in the OECD is impressive ($63 billion for the UK and $62 billion for France in 2012).

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Topics:  Productivity and Innovation

Tags:  R&D, US, productivity, wages, multinationals, FDI, spillovers

Overcoming the obstacles to international macro policy coordination is hard

Olivier Blanchard, Jonathan D Ostry, Atish R Ghosh 20 December 2013

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International policy coordination is like the Loch Ness monster – much discussed but rarely seen. Going back over the decades, and even further in history to the period between the two world wars, coordination efforts have been episodic.

Coordination seems to occur spontaneously in turbulent periods, when the world faces the prospect of some calamitous outcome and the key players are seeking to avoid cascading negative spillovers. In quieter times coordination is rarer, though not unheard of – the Louvre and Plaza accords are examples. 

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Topics:  Macroeconomic policy

Tags:  spillovers, fiscal consolidation, financial regulation, policy coordination, unconventional monetary policy, currency war

Multinationals assist domestic suppliers? Perhaps think again

Olivier N. Godart, Holger Görg, Christiane Krieger-Boden 29 April 2013

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It is empirically well established that multinationals raise productivity levels of their local suppliers in their host countries. Firm-level data show that productivity of upstream industries is the higher the higher the importance of multinationals in downstream industries is (e.g. Javorcik 2004, Barrios et al. 2011).

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Topics:  Development International finance International trade

Tags:  multinationals, spillovers, backward linkages

Beggar-thy-neighbours? Spillover effects of exchange rates

Aaditya Mattoo, Arvind Subramanian, Prachi Mishra 23 March 2012

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Nearly all of the empirical research on exchange rates is focused on the impact of their changes on the country experiencing or undertaking them. This is true of the older, voluminous literature on the trade consequences of exchange rates (surveyed in Goldstein and Khan 1985), as well as more recent contributions like Rodrik (2008) and Berman et al. (2012). There is less evidence quantifying the effect of exchange rate movements on the exports of competitor countries, a classic case of spillover that, in its adverse manifestation, is dubbed the “beggar-thy-neighbour” effect.

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Topics:  Exchange rates

Tags:  China, spillovers, beggar-thy-neighbour

Clustering together abroad: South Korean multinationals in China

Peter Debaere, Joon H. Lee , Myungho Paik 03 June 2009

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Foreign direct investment has played a prominent role in the current wave of globalisation. The World Investment Report (UNCTAD, 2008) notes that total worldwide FDI flows in 2007 amounted to 1.8 trillion dollars. More than 25% of these flows were to developing economies. China has received a major part of these FDI flows, and it has also been very active in trying to attract multinationals with export processing zones and tax incentives. It is no surprise then, that policymakers are eager to better understand the driving forces behind multinational relocation decisions.

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Topics:  International finance

Tags:  spillovers, foreign direct investment, agglomeration

Economic spillovers from international environmental cooperation

Andrew K Rose, Mark M. Spiegel 02 July 2008

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Successful international environmental agreements (IEAs) must meet two important criteria:1 (1) Countries must sign up voluntarily, and (2) the agreements must be self-enforcing, in the sense that members of an IEA must have the capacity and the willingness to respond to deviations by an individual or group of countries from the rules of the treaty.

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Topics:  Environment

Tags:  capital flows, spillovers, environmental agreements

The lifecycle of regions

David B Audretsch, Oliver Falck, Maryann P. Feldman, Stephan Heblich 29 April 2008

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The European Union spends a substantial fraction of its budget on regional policy with the goal of reducing inequality, particularly for those European regions hardest hit by unemployment and structural change. Designing regional policy, however, is not a simple matter. Regions vary widely and there is no comprehensive theoretical framework to guide policymakers toward the single policy or set of policies appropriate for each region. Differences between regions are complex, encompassing variation in physical endowments, population density, and industrial concentration, to name just a few.

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Topics:  Europe's nations and regions Productivity and Innovation

Tags:  spillovers, regional policy, cities

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