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Supt. of Doc. no.: AE2.108:F31. ; Bibliography: p. 108-109. ; Mode of access: Internet.

In studies concluding that public debt may hamper GDP growth, the debt tipping effects are estimated as if there were a single global currency. This means that such studies ignore the likely biggest cause of changes in growth rates, namely damage from exchange rate liquidity shocks because we do not live in the fairyland of a single global currency. The conclusions of these studies are accordingly invalid. They deflect attention from a prime danger, namely an exchange-rate-precipitated global meltdown a danger of the repetition of events of 80 years ago. These studies are misleading in other respects too. Their estimates of growth determinants conflate the differential growth effects of government expenditures with those of tax concessions and uncollected taxes as contributors to government debt. The conflation entices adherents to see all increases in government debt as arising from excessive expenditures, so that in the current crisis, the real problems are unaddressed. Instead, harmful policies of austerity and depreciation, are proposed that would exacerbate the problems and heighten the dangers. In this global downturn, policy should be redirected to avoid repeating the tragedies of the 1930s and 1940s when armaments, Hitler, a world war, then a Korean war were all needed to make the fiscal stimulus mighty enough to restore US employment after the 1930s global meltdown from exchange rate liquidity shocks. Needed are employment-generating fiscal stimulus in societally productive activities, reinstatement of the constraints that countries employed into the 1970s to limit government interest rates, and moves to instate a single global currency. JEL: E6, F31, G01, H62, H63

This study provides additional information about the drivers of external reserves in Nigeria. The result using Autoregressive Distributed Lag (ARDL) model estimation approach for the period 1980-2015 shows that remittances, among other macroeconomic variables, increased external reserves in the short run but weakens it in the long run. Remittances depletes external reserves through its effect on inflation rate and the nonsterilized intervention of the Central Bank. Furthermore, regime shift to relatively floating exchange rate causes remittances to increase reserves. From the foregoing, it is important for the authorities to continue operating relatively flexible exchange rate, and curtail excessive spending of remittances.

Keywords: , , , , .
JEL Classification: F31, F24, C22, F31

The internationalization of China's currency, the renminbi (RMB) bolsters the growing economic and political influence of China in the Asia-Pacific region. This paper assesses the evolution of RMB exchange rate co-movements against the US dollar (USD) within the region. While the RMB's influence is growing, it is also found to be asymmetric and varying over time depending on the global movement of the USD. The trend is strong when the USD depreciates, but fades when the USD appreciates.

This paper examines the long-run determinants of the euro-yen exchange rate. Using cointegration analysis, we find a consistent and significant relationship between the real exchange rate and relative productivity, the net foreign asset position, relative government spending and terms of trade shocks, as well as a fairly rapid mean reversion of the exchange rate to its equilibrium. The "equilibrium" rate tracks the trends in the actual exchange rate quite well, accounting for a large part of the yen appreciation from the mid-1970s to 2001. Our findings suggest that the euro appreciation against the yen in 2001 represented an equilibrium correction of its previous depreciation. Moreover, the width of the error bands highlights the difficulties arising when attempting to determine the precise equilibrium value of a currency.