Review International Currency Portfolios

International Currency Portfolios High quality books

International Currency Portfolios
By:Mr. Michael Kumhof
Published on 2009-03-01 by International Monetary Fund

This paper develops a theory of international currency portfolios that holds in general equilibrium, and that is therefore not subject to the criticisms directed at the portfolio balance literature of the 1980s. It shows that, under plausible assumptions about fiscal policy, the relationship between the rates of return of different currency bonds is not correctly described by an arbitrage relationship but instead also depends on outstanding bond stocks. Other findings are: (1) There is a monotonically increasing relationship between domestic interest rates and the portfolio share of domestic currency denominated assets. This relationship is steep at low levels of government debt, and almost flat at high levels of government debt. (2) Optimal private sector foreign currency positions are negative, and their size is decreasing in exchange rate volatility. Under volatile exchange rates large negative aggregate net foreign asset positions can only be rationalized by assuming large public sector borrowing from foreign governments. (3) For a baseline economy with zero net foreign assets, open market sales of domestic government debt lead to valuation gains (losses) when the country as a whole has a short (long) position in foreign currency. (4) A fiscal theory of exchange rate determination is compatible with general equilibrium in a two-country world. (5) Equilibria are determinate when both fiscal and monetary policy are passive.

This Book was ranked at 31 by Google Books for keyword Currency.

Book ID of International Currency Portfolios's Books is ZWIet0KgH5EC, Book which was written byMr. Michael Kumhofhave ETAG "DIsUiqJfU+0"

Book which was published by International Monetary Fund since 2009-03-01 have ISBNs, ISBN 13 Code is 9781452732923 and ISBN 10 Code is 1452732922

Reading Mode in Text Status is true and Reading Mode in Image Status is true

Book which have "35 Pages" is Printed at BOOK under CategoryBusiness and Economics

This Book was rated by Raters and have average rate at ""

This eBook Maturity (Adult Book) status is NOT_MATURE

Book was written in en

eBook Version Availability Status at PDF is true and in ePub is true

Book Preview