Foreign Exchange Constraint and Developing Economies

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Foreign Exchange Constraint and Developing Economies

9781800880498 Edward Elgar Publishing
Edited by Aleksandr V. Gevorkyan, Ph.D., Henry George Chair in Economics and Associate Professor, Department of Economics and Finance, The Peter J. Tobin College of Business, St. John’s University, New York, US
Publication Date: January 2023 ISBN: 978 1 80088 049 8 Extent: 278 pp
Foreign Exchange Constraint and Developing Economies addresses the complex nature of foreign exchange constraint for macroeconomic and social development. The book collects expertise and perspectives from a diverse set of contributions. Using a combination of innovative theoretical and empirical approaches, the book suggests several analytical frameworks to help advance academic research and policy work on foreign exchange and sustainable development.

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Critical Acclaim
Contributors
Contents
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Foreign Exchange Constraint and Developing Economies addresses the complex nature of foreign exchange constraint for macroeconomic and social development. The book collects expertise and perspectives from a diverse set of contributions. Using a combination of innovative theoretical and empirical approaches, the book suggests several analytical frameworks to help advance academic research and policy work on foreign exchange and sustainable development.

Chapters explore how trends in exchange rates, currency dynamics and international capital markets impact development models of primarily small open economies. The problems of global capital flows affected by the Covid-19 pandemic are also reviewed. The book presents analyses of both country-level and regional patterns and discusses broader implications for emerging markets.

Exploring urgent questions for academic and policy agendas, this will be an important read for economists and researchers working on the topics of economic development, international economics, open economy, exchange rate management, sovereign debt, central banking, and monetary policy. Applied economists and policymakers will also find this a meaningful resource.
Critical Acclaim
‘Most emerging and developing economies face a persistent foreign exchange gap. Holding foreign exchange reserves, even in large amounts, does not eradicate the gap that essentially produces persistently foreign exchange constrained economies. This book is a very helpful collection of chapters that elucidates the various manifestations for the foreign exchange constraint. It covers a wide number of important topics such as capital flows, foreign debt, exchange rate policy, the role of MNCs, financial crisis, and others. The collection will be very helpful to researchers and policy makers.’
– Tarron Khemraj, New College of Florida, US

‘With the Ukraine crisis fueling inflation, rising interest rates and soaring debt-burdens, this timely volume brings together diverse approaches spanning theoretical models, empirical investigations, and policy analyses to address the challenges posed by volatile capital flows, deteriorating exchange-rates and the impact of Covid-19 to EMDCs in a world in flux.’
– Ramaa Vasudevan, Colorado State University, US

‘The chapters in Professor Gevorkyan’s edited book are a reminder that the external constraint is essentially a foreign exchange one, and that the post-Bretton Woods institutions are ill designed to help developing countries cope with the volatility of international capital flows. This is a timely and relevant collection of papers that should be required reading for all the experts in international financial issues.’
– Matías Vernengo, Bucknell University, US

‘After more than 2 decades of work in developing countries, realizing the many ways conventional modern macroeconomics education misses the main challenges that are actually faced by their policymakers, I am delighted to see the relevant topics for growth and macroeconomic stability in developing economies make a comeback. Aleksandr Gevorkyan and the authors that joined him in this fine treatment of the issues need to be congratulated and encouraged to continue deepening this most-relevant research and policy analysis program.’
– João Farinha Fernandes, Asian Development Bank
Contributors
Contributors include: Douglas Alencar, Hayk Avetisyan, Uthman M. Baqais, Eduardo F. Bastian, Georgia Bush, Esteban Pérez Caldentey, Claudia de Camino, Otaviano Canuto, Barry Eichengreen, Luis O.L. Escobar-Farfán, Łukasz Faryj, Erwin Flores-Tamés, Aleksandr V. Gevorkyan, Hugo C. Iasco-Pereira, Viacheslav Ilin, Samar Issa, Frederico G. Jayme Jr, Elżbieta Kubińska, Anna Macko, Serafin Martínez-Jaramillo, Fabricio J. Missio, Dave Seerattan, Cecilia Vera, Joanna Wyrobek, Dmitry Yakovlev
Contents
Foreword by Barry Eichengreen
Preface and acknowledgements

PART I: CAPITAL MARKETS
1. Foreign exchange constraint and select developing economies: insights from the Caucasus and Central Asia
Aleksandr V. Gevorkyan
2. Domestic sovereign yields puzzle in 2020: falling yields amid a large fiscal
shock in emerging markets
Hayk Avetisyan, Viacheslav Ilin, and Dmitry Yakovlev
3. Wealth composition, valuation effect and upstream capital flows
Uthman M. Baqais
4. Non-financial corporations as financial intermediaries and their
macroeconomic implications: an empirical analysis for Latin America
Claudia de Camino, Esteban Pérez Caldentey and Cecilia Vera

PART II: CURRENCY AND EXCHANGE
RATE
5. Currency relationships over time: a network analysis and case study of
Mexico
Georgia Bush, Serafin Martínez-Jaramillo, Luis O. L. Escobar-Farfán and Erwin
Flores-Tamés
6. On the limits of real exchange-rate targeting under foreign exchange
constraint
Eduardo F. Bastian
7. Optimal foreign exchange reserves in small open economies: the case of the
Caribbean
Dave Seerattan
8. Two sides of a currency crisis in emerging economies: economic and
behavioural side of currency risk derivatives
Elżbieta Kubińska, Joanna Wyrobek, Łukasz Faryj and Anna Macko
9. Real exchange rate, demand growth and labour productivity: a growth model
of cumulative and circular causation
Hugo C. Iasco-Pereira, Fabrício J. Missio, Frederico G. Jayme Jr and Douglas Alencar

PART III: COVID-19 AND OPEN ECONOMY
10. Capital flows and emerging market economies since the global financial
crisis
Otaviano Canuto
11. The Lebanese banking crisis: an exploration of the impaired banking
system
Samar Issa

Index
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