Twin Deficits and Twin Decades (2008)
Jeffrey Frankel, Harpel Professor, Capital Formation
policy of the current decade in many respects mirrors the fiscal policy of the 1980s. This is particularly true in that growing budget deficits are reflected in growing current account deficits. The...
Comments on “Full Dollarization: The Case of Panama ” by Goldfajn and Olivares (2007)
Jeffrey Frankel, Harpel Professor
Let me begin by expressing my admiration for the industriousness of Ilan Goldfajn. At LACEA he has simultaneously hosted one of the smoothest-running large meetings I have ever attended, presented...
Jel Classification, Codes F, Jeffrey Frankel, Sergio Schmukler, Sergio Schmukler, Luis Servn, ...
+ We have enormously benefited from the collaboration of Eduardo Fajnzylber, who discussed several ideas with us and performed superb research assistance work. We are likewise indebted to Ron Alquist...
A Proposal to Introduce the ECU First in the East (2007)
Jeffrey Frankel, Jeffrey Frankel, Senior Fellow, Senior Fellow, Charles Wyplosz, Charles Wyplosz
First problem. Some of the countries of Eastern Europe and the former Soviet Union are sufficiently eager for price stability that they are willing to sacrifice monetary sovereignty, and to tie their...
February 3, 1996+ A Comment on "Tax Policy and the Activities of Multinational Corporations" (2007)
Jeffrey Frankel Economics, Jeffrey Frankel
this paper in a positive manner, it is refreshing to see so many researchers looking for and finding statistically significant evidence in support of their hypotheses, instead of either rejecting or...
Fixed and flexible exchange rates each have advantages, and a country has the right to choose the regime suited to its circumstances. Nevertheless, several arguments support the view that the de...
Fixed and flexible exchange rates each have advantages, and a country has the right to choose the regime suited to its circumstances. Nevertheless, several arguments support the view that the de...
Will the Euro Eventually Surpass the Dollar as Leading International Reserve Currency? (2006)
Chinn, Menzie D., Frankel, Jeffrey
The euro is a plausible competitor to replace the dollar as the leading currency central banks hold, just as the dollar replaced the pound. Factors affecting the dollar's status include size of the...
Fixed and flexible exchange rates each have advantages, and a country has the right to choose the regime suited to its circumstances. Nevertheless, several arguments support the view that the de...
Patrick Bolton, Jeffrey Frankel
The first half of Patrick Bolton’s paper surveys corporate bankruptcy practices in various major countries. Then the remaining half attempts to draw lessons for the SDRM initiative currently being...
A Proposed Monetary Regime for Small Commodity-Exporters: Peg the Export Price (“PEP”) (2002)
Jeffrey Frankel, Jeffrey Frankel, Organized Adam Posen, Benn Steil
those of the author(s) and do not necessarily reflect those of the John F. Kennedy
given to the source. The Role of Industrial Country Policies in Emerging Market Crises (2001)
Jeffrey A. Frankel, Nouriel Roubini, Jeffrey A. Frankel, Nouriel Roubini, Jeffrey Frankel, Nouriel Roubini
The authors both served in the US Administration during the late 1990s. They wish to thank Ronald
Verifiability and the vanishing intermediate exchange rate regime (2000)
World Bank, World Bank, Jeffrey Frankel, Sergio Schmukler, Sergio Schmukler, Luis Servén, ...
✢ This paper was written for the April 2000 meeting of the Brookings Trade Forum, Brookings Institution, Washington DC. We have enormously benefited from the collaboration of Eduardo Fajnzylber,...
Globalization of the Economy (2000)
Jeffrey Frankel, Harpel Professor
don fell from $244.65 to $3.32. Jet air shipping and refrigeration have changed the status of goods that had previously been classified altogether as not tradable internationally. Now fresh-cut...
An Estimate of the Effects of Currency Unions on Trade and Growth (2000)
Jeffrey A. Frankel, A.K. Rose, Jeffrey Frankel, Andrew Rose
Gravity-based cross-sectional evidence indicates that currency unions stimulate trade as much or more than do free trade areas. Thus currencies are a source of the puzzling home-country bias in...
Proposals Regarding Restrictions on Capital Flows (1999)
heir saving by investing in the emerging market than they could domestically. Third, everyone benefits from the opportunity to diversify away risks and smooth disturbances. Fourth, letting foreign...
On the Euro: Impacts on Members and Non-Members (1998)
Jeffrey Frankel, Kluwer Academic Publishers, Norwell Ma
this article. But an analysis of the role of relative growth rates suggests that the currency shares adjust only very slowly.
How to Gauge the Importance of Trade to the U.S. Economy (1997)
s to negotiate international trade agreements. So, why do we need fast track authority today? What would the Administration use it for? We would focus on three key areas for its use. The first use...
Emerging Currency Blocs (1993)
Jeffrey Frankel, Shang-jin Wei
Using the gravity model to examine bilateral trade patterns throughout the world, we find clear evidence that trading blocs are emerging in some parts of the world. In Europe, it is the EC that...
Does Foreign-Exchange Intervention Matter? The Portfolio Effect (1993)
Kathryn Dominguez, Jeffrey Frankel
We wish to thank Julia Marsh and Julia Lowell for research assistance, and Dr. Franz Scholl of the Bundesbank for making the daily intervention data available. This paper is part of NBER's...
Fixed and flexible exchange rates each have advantages, and a country has the right to choose the regime suited to its circumstances. Nevertheless, several arguments support the view that the de...
A Pacific economic bloc: is there such an animal?
Jeffrey Frankel, Shang-Jin Wei
Pacific Area ; International trade
The Forward Market in Emerging Currencies: Less Biased Than in Major Currencies
Jeffrey Frankel, Jumana Poonawala
any studies have replicated the finding that the forward rate is a biased predictor of the future change in the spot exchange rate. Usually the forward discount actually points in the wrong...
Fixed and flexible exchange rates each have advantages, and a country has the right to choose the regime suited to its circumstances. Nevertheless, several arguments support the view that the de...
Kathryn M. Dominguez, Jeffrey Frankel
The time is ripe for a re-examination of the question whether foreign exchange intervention can affect the exchange rate. We attempt to isolate two distinct effects: the portfolio effect, whereby an...
Crisis, contagion, and country funds: effects on East Asia and Latin America
Jeffrey Frankel, Sergio Schmukler
Spillovers effects, from one country or region to other countries and regions, have attracted renewed attention in the aftermath of the Mexican crisis of December 1994. This paper uses data on...
What an Economic Adviser Can Do When He Disagrees with the President
The author, a member of President Bill Clinton's Council of Economic Advisers, traces a fascinating history, some of which has never been told, about how differences between economic advisers and...
Verifying exchange rate regimes
Serven, Luis, Frankel, Jeffrey, Fajnzylber, Eduardo, Schmukler, Sergio
Credibility and transparency are at the core of the current debate about exchange rate regimes. The steady growth in the magnitude and variability of international capital flows has complicated the...
Global transmission of interest rates : monetary independence and the currency regime
Frankel, Jeffrey, Schmukler, Sergio, Serven, Luis
The authors empirically study the sensitivity of local interest rates to international interest rates and how that sensitivity is affected by a country's choice of exchange rate regime. To establish...
The Stabilizing Properties of a Nominal GNP Rule.
The author examines the ability of a nominal GNP rule for monetary policy to stabilize output and inflation. Other regimes considered are a money rule, an exchange rate rule, a price level rule, and...
A Proposed Monetary Regime for Small Commodity Exporters: Peg the Export Price ('PEP').
On the one hand, the big selling points of floating exchange rates--monetary independence and accommodation of terms of trade shocks--have not lived up to their promise. On the other hand, proposals...
ON THE RAND: DETERMINANTS OF THE SOUTH AFRICAN EXCHANGE RATE
This paper is an econometric investigation of the determinants of the real value of the South African rand over the period 1984-2007. The results show a relatively good fit. As always with exchange...
Eduardo Cavallo, Jeffrey Frankel
Openness to trade is one factor that has been identified as determining whether a country is prone to sudden stops in capital inflows, crashes in currencies, or severe recessions. Some believe that...
Jeffrey Frankel, Sergio Schmukler
It has been suggested that Mexican investors were the “front-runners†in the peso crisis of December 1994, turning pessimistic before international investors. Different expectations about...
Country Funds and Asymmetric Information
Jeffrey Frankel, Sergio Schmukler
Closed-end country funds trade in New York at their price. Their Net Asset Value (NAV) represent the value of the underlying assets, usually traded in each particular country. If the holders of the...
The welfare implications of continental trading blocs in a model with transport costs
Ernesto Stein, Jeffrey Frankel
International trade ; Econometric models ; Free trade
ASEAN in a regional perspective
Jeffrey Frankel, Shang-Jin Wei
There are two striking conventional wisdoms about the status of regional trading blocs in East Asia. The first is that the only formal regional arrangement in the area, ASEAN, does not in fact...
Why money announcements move interest rates: an answer from the foreign exchange market
Charles Engel, Jeffrey Frankel
Interest rates ; Money supply ; Monetary policy - United States ; Foreign exchange ; Econometric models
Kathryn Dominguez, Jeffrey Frankel
Foreign exchange - Law and legislation ; Foreign exchange rates ; Mark, German
The Euro Area and World Interest Rates
We analyze the behavior of world interest rates, focusing on the ramifications of European Monetary Union. Our analysis indicates that nominal US interest rates tend to drive European rates at both...
The Euro Area and World Interest Rates
We analyze the behavior of world interest rates, focusing on the ramifications of European Monetary Union. Our analysis indicates that nominal US interest rates tend to drive European rates at both...
Patterns in Exchange Rate Forecasts for Twenty-five Currencies.
Chinn, Menzie, Frankel, Jeffrey
The properties of exchange-rate forecasts are investigated, with a data set encompassing a broad cross section of currencies. Over the entire sample, expectations appear to be biased. This result is...
How Well Do Foreign Exchange Markets Function: Might a Tobin Tax Help?
The case in favor of the Tobin tax features two major arguments. (1) Such a levy might reduce exchange rate volatility. A simple model giving this conclusion is presented in the Appendix. The...
An Estimate Of The Effect Of Common Currencies On Trade And Income
To quantify the implications of common currencies for trade and income, we use data for over 200 countries and dependencies. In our two-stage approach, estimates at the first stage suggest that...
ON THE RAND: DETERMINANTS OF THE SOUTH AFRICAN EXCHANGE RATE
This paper is an econometric investigation of the determinants of the real value of the South African rand over the period 1984-2007. The results show a relatively good fit. As always with exchange...
The European Monetary System: Credible at Last?
Frankel, Jeffrey, Phillips, Steven
We update tests of the credibility of the EMS exchange rate target zones. Our main methodological innovation is to use a survey of exchange rate forecasts, as well as interest differentials, in...
Debt and Interest Rates: The U.S. and the Euro Area
Chinn, Menzie, Frankel, Jeffrey
We find that real interest rates paid on government debt depend significantly upon current and expected future levels of debt, in Europe as in the US. But this result only emerges when we condition...
An Estimate of the Effect of Common Currencies on Trade and Income
Frankel, Jeffrey, Rose, Andrew K.
Gravity-based cross-sectional evidence indicates that currency unions and currency boards stimulate trade; cross-sectional evidence indicates that trade stimulates income. This paper estimates the...
Assessing the Efficiency Gains from Further Liberalization
The paper begins by arguing that globalization, which here means reductions in the remaining barriers to international trade, still has a long way to go. Next it briefly reviews the evidence on the...
American Economic Policy in the 1990's
Frankel, Jeffrey, Orszag, Peter
The book American Economic Policy in the 1990s, which has a publication date of Spring 2002 from MIT Press, is the outcome of a conference held at the Kennedy School in June 2001. It brought together...
The Role of Industrial Country Policies in Emerging Market Crises
Frankel, Jeffrey, Roubini, Nouriel
This paper considers policies of the industrialized countries, as they pertain to crises in emerging markets. These fall into three areas: (1) their own macroeconomic policies, which determine the...
A Proposed Monetary Regime for Small Commodity-Exporters: Peg the Export Price ("PEP")
On the one hand, the big selling points of floating exchange rates - monetary independence and accommodation of terms of trade shocks - have not lived up to their promise. On the other hand,...
Experience of and Lessons from Exchange Rate Regimes in Emerging Economies
The paper reviews recent trends in thinking on exchange rate regimes. It begins by classifying countries into regimes, noting the distinction between de facto and de jure regimes, but also noting the...
National Institutions and the Role of the IMF
The word "institutions" covers a range of country characteristics, which vary widely: some are not very relevant to the business of the Fund (and, regarding some others, we cannot be confident of...
Is Trade Good or Bad for the Environment? Sorting Out the Causality
Frankel, Jeffrey, Rose, Andrew K.
We seek to contribute to the debate over globalization and the environment by asking: What is the effect of trade on a country's environment, for a given level of GDP? We take specific account of the...
Frankel, Jeffrey, Cavallo, Eduardo
Openness to trade is one factor that has been identified as determining whether a country is prone to sudden stops in capital inflow, currency crashes, or severe recessions. Some believe that...
Summary of key points: · A fixed exchange rate and a flexible exchange rate each have its own advantages. · A country should have the right to choose the regime best suited to its circumstances. ·...
Optimum currency area theory says that trade patterns and cyclical correlations are important criteria for whether a country should join a monetary area such as EMU. But these criteria are...
Kyoto and Geneva: Linkage of the Climate Change Regime and the Trade Regime
The multilateral regime to address the problem of global climate change is manifest in the Kyoto Protocol, negotiated in that city in 1997, and likely soon to enter into force. The multilateral...
Contractionary Currency Crashes In Developing Countries
To update a famous old statistic: a political leader in a developing country is twice as likely to lose office in the 6 months following a currency crash as otherwise. This difference, which is...
Slow Passthrough Around the World: A New Import for Developing Countries?
Frankel, Jeffrey, Parsley, David, Wei, Shang-Jin
Developing countries traditionally experience passthrough of exchange rate changes that is greater and more rapid than high-income countries experience. This is true equally of the determination of...
Will the Euro Eventually Surpass the Dollar as Leading International Reserve Currency?
Chinn, Menzie, Frankel, Jeffrey
Might the dollar eventually follow the precedent of the pound and cede its status as leading international reserve currency? Unlike the last time this question was prominently discussed, ten years...
Global Imbalances and Low Interest Rates: An Equilibrium Model vs. A Disequilibrium Reality
The most obvious explanation for the large and widening US current account deficit is the high budget deficit and low national saving. But a variety of clever economists have come up with 8 other,...
Formulas for Quantitative Emission Targets
Start from three premises: (1) Global Climate Change is a genuine problem; (2) the Kyoto Protocol constitutes the only multilateral framework we have to address it; and (3) the Protocol is...
Responding to Financial Crises
They say “there are no atheists in foxholes.” Perhaps, then, there are also no libertarians in crises. Even those in favor of sharply reducing the role of the government usually agree that, for...
On the Rand: Determinants of the South African Exchange Rate
This paper is an econometric investigation of the determinants of the real value of the South African rand over the period 1984-2006. The results show a relatively good fit. As always with exchange...
South Africa: Macroeconomic Challenges after a Decade of Success
Frankel, Jeffrey, Smit, Ben, Sturzenegger, Federico
More than halfway through the new decade, the South African economy has done very well. Growth was high in 2004, 2005 and 2006, capital inflows and the rand are strong, the budget is relatively...
The Euro May over the Next 15 Years Surpass the Dollar as Leading International Currency
Chinn, Menzie, Frankel, Jeffrey
The euro has arisen as a credible eventual competitor to the dollar as leading international currency, much as the dollar rose to challenge the pound 70 years ago. This paper uses...
Frankel, Jeffrey, Wei, Shang-Jin
The paper offers a new approach to estimate de facto exchange rate regimes, a synthesis of two techniques. One is a technique that the authors have used in the past to estimate implicit de facto...
Fiscal and monetary policy in a commodity-based economy
Jeffrey Frankel, Ben Smit, Federico Sturzenegger
A rough description of macroeconomic policy in South Africa would be that monetary policy concentrates on building nominal credibility through focusing on inflation, while the brunt of the...
South Africa: Macroeconomic challenges after a decade of success
Jeffrey Frankel, Ben Smit, Federico Sturzenegger
More than halfway through the decade, the South African economy has done very well. This report asks whether such achievements provide grounds for complacency. In particular it discusses the current...
Jeffrey Frankel, Shang-Jin Wei
This paper offers a new approach to estimate countries’ de facto exchange rate regimes, a synthesis of two techniques. One is a technique that the authors have used in the past to estimate implicit...
Exchange Rate Expectations and the Risk Premium: Tests For a Cross- Section of 17 Currencies
Survey data on a broad cross section of 17 currencies are used to determine whether the forward discount moves primarily in response to changes in expectations of depreciation, or in the risk...
A Note on Internationally Coordinated Policy Packages Intended to be Robust Under Model Uncertainty
Jeffrey Frankel, Scott Erwin, Katharine Rockett
Holtham and Hughes Hallett, and a number of other authors, have suggested that a printout of all 1,000 cases of coordination considered in Frankel and Rockett (1988) should be made available. They...
The European Monetary System: Credible at Last?
Jeffrey Frankel, Steven Phillips
We update tests of the credibility of the EMS exchange rate target zones. Our main methodological innovation is to use a survey of exchange rate forecasts, as well as interest differentials, in...
Patterns in Exchange Rate Forecasts for 25 Currencies
We investigate the properties of exchange rate forecasts with a data set encompassing a broad cross section of currencies. The key finding is that expectations appear to be biased in our sample. This...
Verifiability and the Vanishing Intermediate Exchange Rate Regime
Jeffrey Frankel, Sergio Schmukler, Luis Serven
The corners hypothesis holds that intermediate exchange rate regimes are vanishing, or should be. Surprisingly for a new conventional wisdom, this hypothesis so far lacks analytic foundations. In...
Will the Euro Eventually Surpass the Dollar as Leading International Reserve Currency?
Might the dollar eventually follow the precedent of the pound and cede its status as leading international reserve currency? Unlike ten years ago, there now exists a credible competitor: the euro....
On the Rand: Determinants of the South African Exchange Rate
This paper is an econometric investigation of the determinants of the real value of the South African rand over the period 1984-2006. The results show a relatively good fit. As so often with exchange...
Why the Euro Will Rival the Dollar
Evro je izrastao u kredibilnog potencijalnog konkurenta dolaru kao vodećoj međunarodnoj valuti, baš kao što je dolar pretekao britansku funtu pre 70 godina. Ovaj rad koristi ekonometrijski...
Why the Euro Will Rival the Dollar
The euro has arisen as a credible eventual competitor to the dollar as leading international currency, much as the dollar rose to challenge the pound 70 years ago. This paper uses...
Two theoretical propositions have played important roles in the thinking of U.S. presidents enacting large tax cuts since 1981. The first, often known as the Laffer Hypothesis, claims that reductions...
Global Environmental Policy and Global Trade Policy
The global climate regime, as represented by the Kyoto Protocol, may be on a collision course with the global trade policy regime, as represented by the WTO (World Trade Organization)....
An advantage of monetary union is facilitating trade. After many critiques, Rose's basic finding is left standing: currency unions have greater trade effects than previously believed. Updated...
NBER International Seminar on Macroeconomics 2004
Richard H. Clarida, Jeffrey Frankel, Francesco Giavazzi, Kenneth D. West
Wechselkurs, Whrung, Whrungspolitik, China, Renminbi, Exchange rate, Currency, Currency policy,
New Estimation of China's Exchange Rate Regime
The paper updates the answer to the question: what precisely is the exchange rate regime that China has put into place since 2005, when it announced a move away from the dollar peg? Is it a basket...
Andy Rose (2000), followed by many others, has used the gravity model of bilateral trade on a large data set to estimate the trade effects of monetary unions among small countries. The finding has...
I approach the state of global currency issues by identifying eight concepts that I see as having recently "peaked" and eight more that I see as currently rising in relevance. Those that I see as...
The Forward Market in Emerging Currencies: Less Biased Than in Major Currencies
Frankel, Jeffrey, Poonawala, Jumana
Many studies have replicated the finding that the forward rate is a biased predictor of the future change in the spot exchange rate. Usually the forward discount actually points in the wrong...