According to Rogoff (1995), Purchasing Power Parity (PPP) fits well one empirical feature of the data, namely the high short-run volatility of real exchange rates, but also implies that shocks should die away in one to two years (the time interval compatible with price and wage stickiness). However, existing point estimates of half-life deviations from PPP are in the order of 3 to 5 years. This...

It appears likely that the number of currencies in the world, having proliferated along with the number of countries over the past 50 years, will decline sharply over the next two decades. The question I plan to pose here is: where, from an economic point of view, should we aim for this process to stop? Should there be a single world currency, as Richard Cooper (1984) boldly envisioned? Should ...

Michael J. Naylor, Lawrence C. Rose, and Brendan J. Moyle (1) Corresponding Author, Dept of Finance, Banking and Property, Massey University, Palmerston North, New Zealand, [email protected] Department of Commerce, Massey University Abstract This paper uses two hierarchical techniques, a minimal spanning tree and an ultrametric hierarchical tree, to extract a topological influence map for...

In this paper we evaluate the feasibility of a common Asian Currency Unit (ACU) involving countries of East and South Asia. We analyze the various properties of an ACU and calculate it’s value using weighted averages of the values of Asian currencies. Looking at the movement of individual Asian currencies vis-á-vis the ACU, we find that there have been severe misalignments among the Asian curre...

This paper examines price discovery for four Australian stocks cross-listed in New Zealand and five New Zealand stocks cross-listed in Australia for the period January 2002 to December 2005. Estimating Hasbrouck (1995) information shares over time reveals that the importance of the Australian market is growing. However, when incorporating the AUD/NZD cross-rate into the model, we find that this...

A number of commentators have argued that technological innovation is about to change the institutional structure of the retail payments system. Through the potential private issue of currency via new electronic payments systems – electronic money – individuals will create currencies based on units of account different from the dominant unit of account in the respective market. Thereby, the eff...

The popularization of Bitcoin, a decentralized crypto-currency has inspired the production of several alternative, or “alt”, currencies. Ethereum, CryptoNote, and Zerocash all represent unique contributions to the cryptocurrency space. Although most alt currencies harbor their own source of innovation, they have no means of adopting the innovations of other currencies which may succeed them. We...

Statistical decision theory, whether based on Bayesian principles or other concepts such as minimax or admissibility, relies on the idea of minimizing expected loss or maximizing expected utility. Loss and utility functions are generally treated as unitless numerical measures of how costly or valuable are the various consequences of potential decisions. In this paper, we address directly the is...

The paper develops an alternative hypothesis that attributes collateral responsibility for therecent spate of financial crises to a basic flaw of the architecture of the international financialsystem, free markets for foreign exchange. A valid positional distinction between reserve/ hardand soft currencies, based on reputation, accounts for the systematic substitution of the former<...