This paper studies the causes, mechanisms and consequences of decreasing firm value and welfare loss in an economy under a fixed exchange rate regime when there is an unexpected appreciation in domestic currency. We also study the possible economic crisis caused by the exchange rate shock. We consider the established production capacity as well as the training of firmspecific labors before prod...

This paper studies the potential for liquidity crises and their impact on the course of monetary and exchange rate policies in a microfounded general equilibrium dynamic model in the tradition of Diamond and Dybvig (1983) and Chang and Velasco (2000). We produce a small open economy pure exchange overlapping generations model with random relocation along the lines of Smith (2002). The combinati...

In a stylized continuous-time model of a small open economy with perfect capital mobility and a pegged exchange rate, I analyze an experiment in which domestic residents expect a future devaluation. Taking the public’s expectations as exogenous and allowing them to be divergent, I analyze in a short time period before the expected devaluation takes place how transactions of short-term collatera...

study of price trend in iran, showed that general level of prices is rising continually during time. an inflation situation has effect on most economic variables. therefore investigation of effective factors and variables on inflation is important. exchange rate and gap in product are factors which affect inflation. in this paper the impact of exchange rate shocks and gap on inflation in iran’s...

This paper examines the role of collateralized money supply for short-run macroeconomic effects of monetary policy. We apply a simple sticky price model, where the central bank supplies money in exchange for securities that are discounted with the nominal interest rate. The central assumption is that only government bonds are eligible as collateral. If they are dominated in rate of return by pr...

  The main purpose of present study is to analyze the relationship between stock and exchange markets in two Asian countries, Iran and South Korea. A monthly time series of stock price and exchange rate are used over the period 2002: 05 - 2012: 03. The data is collected from the Central Bank of each country and WDI. The calculated stock return and real exchange rate change are used in analysis....

This paper examines empirically the interest rate-exchange rate link in the context of the Mexican experience with a floating exchange regime. The impulse response function derived from an ECM estimated by GMM reveals a lasting positive effect of a currency depreciation on the peso-dollar interest rate differential. Some of the macroeconomic consequences from this pattern are discussed, togethe...

this paper attempts to compare the forecasting performance of the arima model and hybrid arma-garch models by using daily data of the iran’s exchange rate against the u.s. dollar (irr/usd) for the period of 20 march 2014 to 20 june 2015. the period of 20 march 2014 to 19 april 2015 was used to build the model while remaining data were used to do out of sample forecasting and check the forecasti...