Liquidity, exchange rates, and business cycles

Ho, Wai-Ming

doi:10.1016/0304-3932(93)90038-h

Cited by 15 publications

(4 citation statements)

References 17 publications

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“…Fuerst (1992) extends Lucas' work by introducing production in the exchange economy of Lucas (1990). The open-economy models allowing for liquidity effects of monetary injections have been studied by Grilli and Roubini (1992), Ho (1993), and Schlagenhauf and Wrase (1995a,b). Ho (2004) follows this approach to examining the liquidity effects of foreign exchange intervention.…”

Section: Introductionmentioning

confidence: 99%

The welfare implications of foreign exchange intervention

2008

Journal of International Money and Finance

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Section: Introductionmentioning

confidence: 99%

The welfare implications of foreign exchange intervention

2008

Journal of International Money and Finance

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“…The findings of Eichenbaum and Evans (1995) could be rationalized with models that allow for liquidity effects. Following Lucas's (1990) approach to modeling asymmetry of monetary injections, in the open-economy models developed in Grilli and Roubini (1992), Ho (1993), and Schlagenhauf and Wrase (1995a,b) the role of international financial markets in allocating liquidity is studied. Because of limited participation, different economic agents face different trading opportunities, and they are affected asymmetrically by the liquidity shocks.…”

Section: Introductionmentioning

confidence: 99%

Credit market imperfections and exchange rate variability

2000

Canadian J of Economics

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In this paper a two-country overlapping generations model is presented in which the roles of financial factors in the international monetary transmission mechanism are studied and whether and how the two types of credit market imperfections, limited participation, and costly state verification may contribute to the high variability of exchange rates are examined. Liquidity effects generated by monetary disturbances are shown to have qualitatively similar effects on the world economy in the perfect information case and in the costly information case. However, quantitative differences provide different predictions about the variability of economic variables in the world economy. JEL Classification: F31, F41Imperfections dans le marché du crédit et variabilité dans le taux de change. Ce mémoire présente un modèle de deux pays où les générations se chevauchent pour étudier le rôle des facteurs financiers dans le mécanisme de transmission monétaire international, et pour examiner si les deux types d'imperfection (participation limitée et contrôle étatique coûteux) peuvent contribuer à une grande variabilité des taux de change et de quelle manière. On montre que les effets de liquidité engendrés par les perturbations monétaires ont les mêmes effets qualitatifs sur l'économie mondiale que l'information soit parfaite ou coûteuse. Cependant, il y a des différences quantitatives. Ces différences suggèrent des écarts dans les prévisions quant à la variabilité des variables économiques dans l'économie mondiale.

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“…Recently, the international transmission of real business fluctuations has been reexamined in models in which the role of international financial markets in allocating liquidity is stressed (see for example, Ho, 1993;Schlagenhauf and Wrase 1995a;Schlagenhauf and Wrase, 1995b). Following the methodology of Lucas (1990) to capture liquidity effects in modified versions of cash-in-advance models, these models study liquidity effects in the open economy setups.…”

Section: Introductionmentioning

confidence: 99%

Credit market imperfections and nominal exchange rate regimes

1998

Int. J Fin Econ

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This paper presents a two‐country, two‐good, two‐currency overlapping generations model that features limited participation and costly state verification in the credit markets. The model is used to study the role of financial factors in the international transmission of business fluctuations, and to analyse whether the presence of credit market imperfections may have an important impact on the relative desirability of alternative exchange rate regimes. In the presence of informational frictions in credit markets, shocks to productivity are shown to have different channels of influence on the world economy under alternative exchange rate regimes. Therefore, real exchange rate variability depends on the nominal exchange rate regime. It is also shown that although a flexible exchange rate regime may insulate a country from the real shocks of other countries, such shocks may lead the country to attain higher expected welfare levels under a fixed exchange rate regime. © 1998 John Wiley & Sons, Ltd.

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Liquidity, exchange rates, and business cycles

Cited by 15 publications

References 17 publications

The welfare implications of foreign exchange intervention

The welfare implications of foreign exchange intervention

Credit market imperfections and exchange rate variability

Credit market imperfections and nominal exchange rate regimes

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