Abstract This article reviews the panel discussion of “Debt and Macroeconomic Behavior” at the Initiative for Policy Dialogue-Centre for International Governance Innovation conference on sovereign debt restructuring held at Columbia University, New York, September 22, 2015. The session featured three presentations covering the welfare costs of high debt loads, the potential for fiscal austerity to be expansionary and the nexus between expectations, debt and crises. Jonathan Ostry focused on the conditions under which a government should actively pursue debt reduction as opposed to “living with the debt” in his presentation, When Should Public Debt be Reduced? Where debt burdens do not pose a default risk, governments should be content to allow the debt-to-GDP ratio to decline as a result of economic growth. This result is juxtaposed against the contention that debt reduction can be expansionary, which gained influence in policy circles in the wake of the global financial crisis. As Michael Konczal explained in his presentation Searching for Expansionary Austerity, the basis for this claim rests on a few special cases; the empirical evidence does not support the view that debt reduction is always and everywhere good policy. The third presentation, Crises: Principles and Policies by Joseph Stiglitz, reviewed the critical role of expectations in determining long-run steady states and creating the potential for multiple equilibria. Crises can reflect the sudden revision of expectations and the switching of equilibrium. While such a phenomenon sits uneasily with the modeling paradigm of much of recent economic theory, it is difficult to understand events in the Eurozone over the past half-decade in terms of a unique rational expectations equilibrium in which unstable paths are precluded a priori.
{"title":"Debt and Macroeconomic Behavior: Austerity and Restructuring in an Age of Uncertainty","authors":"J. Haley","doi":"10.1515/jgd-2015-0026","DOIUrl":"https://doi.org/10.1515/jgd-2015-0026","url":null,"abstract":"Abstract This article reviews the panel discussion of “Debt and Macroeconomic Behavior” at the Initiative for Policy Dialogue-Centre for International Governance Innovation conference on sovereign debt restructuring held at Columbia University, New York, September 22, 2015. The session featured three presentations covering the welfare costs of high debt loads, the potential for fiscal austerity to be expansionary and the nexus between expectations, debt and crises. Jonathan Ostry focused on the conditions under which a government should actively pursue debt reduction as opposed to “living with the debt” in his presentation, When Should Public Debt be Reduced? Where debt burdens do not pose a default risk, governments should be content to allow the debt-to-GDP ratio to decline as a result of economic growth. This result is juxtaposed against the contention that debt reduction can be expansionary, which gained influence in policy circles in the wake of the global financial crisis. As Michael Konczal explained in his presentation Searching for Expansionary Austerity, the basis for this claim rests on a few special cases; the empirical evidence does not support the view that debt reduction is always and everywhere good policy. The third presentation, Crises: Principles and Policies by Joseph Stiglitz, reviewed the critical role of expectations in determining long-run steady states and creating the potential for multiple equilibria. Crises can reflect the sudden revision of expectations and the switching of equilibrium. While such a phenomenon sits uneasily with the modeling paradigm of much of recent economic theory, it is difficult to understand events in the Eurozone over the past half-decade in terms of a unique rational expectations equilibrium in which unstable paths are precluded a priori.","PeriodicalId":38929,"journal":{"name":"Journal of Globalization and Development","volume":"6 1","pages":"319 - 328"},"PeriodicalIF":0.0,"publicationDate":"2015-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1515/jgd-2015-0026","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"66939982","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract The global community still lacks a regime for sovereign debt restructuring (SDR). However, the recent financial crisis has spawned numerous efforts to fill this glaring gap in global economic governance. At the same time however, there is increasing concern that international investment agreements (IIAs) have already begun to expand their reach into the realm of SDR. Indeed, private investors have attempted to use IIAs to recoup the full value of their bonds in order to circumvent debt restructurings in Argentina and Greece. In this paper we examine the extent to which IIAs are becoming tools for creditors to circumvent debt restructurings and whether new IIAs such as the Trans-Pacific Partnership and the Trans-Atlantic Trade and Investment Partnership will further advance the ability of creditors to do so. We find that contemporary IIAs are increasingly interpreting sovereign bonds as being under their jurisdiction. Thus, debt restructurings may be increasingly subject to claims filed by holdout creditors wishing to recoup the full value of their bonds through private tribunals under IIAs. That said, we also find that some treaties have begun to provide exceptions for certain types of debt restructurings. While such safeguards are a step in the right direction, they will need to become broader in scope and more widespread in application in order to not interfere with the orderly workout of debt problems in the world economy.
{"title":"Mission Creep The Emerging Role of International Investment Agreements in Sovereign Debt Restructuring","authors":"R. Thrasher, K. Gallagher","doi":"10.1515/jgd-2015-0018","DOIUrl":"https://doi.org/10.1515/jgd-2015-0018","url":null,"abstract":"Abstract The global community still lacks a regime for sovereign debt restructuring (SDR). However, the recent financial crisis has spawned numerous efforts to fill this glaring gap in global economic governance. At the same time however, there is increasing concern that international investment agreements (IIAs) have already begun to expand their reach into the realm of SDR. Indeed, private investors have attempted to use IIAs to recoup the full value of their bonds in order to circumvent debt restructurings in Argentina and Greece. In this paper we examine the extent to which IIAs are becoming tools for creditors to circumvent debt restructurings and whether new IIAs such as the Trans-Pacific Partnership and the Trans-Atlantic Trade and Investment Partnership will further advance the ability of creditors to do so. We find that contemporary IIAs are increasingly interpreting sovereign bonds as being under their jurisdiction. Thus, debt restructurings may be increasingly subject to claims filed by holdout creditors wishing to recoup the full value of their bonds through private tribunals under IIAs. That said, we also find that some treaties have begun to provide exceptions for certain types of debt restructurings. While such safeguards are a step in the right direction, they will need to become broader in scope and more widespread in application in order to not interfere with the orderly workout of debt problems in the world economy.","PeriodicalId":38929,"journal":{"name":"Journal of Globalization and Development","volume":"14 1","pages":"257 - 285"},"PeriodicalIF":0.0,"publicationDate":"2015-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1515/jgd-2015-0018","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"66939879","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract The lack of a formal sovereign debt restructuring legal framework has been considered by many as a serious deficit or missing link in the international financial architecture. However, even though the international debates on the topic have been going on for decades, heating up each time with the onset of a debt crisis and cooling down when the crises was contained, up to now such debates have not yet come to final fruition. Nevertheless the topic has never been put to sleep because of frequent and severe debt crises. These crises have never failed to demonstrate the need of a legal framework, even more so this time around. Yet, the international community chose to work on improvement of debt contracts even though it cannot redress the systemic and technical problems facing debt restructurings. In 2014, the United Nations started to work on a legal framework on debt restructuring facing political resistance and misconstrued fears of a legal framework. After more than a year’s hard work, the United Nations passed through vote a resolution on basic principles on debt restructuring processes. This is an important milestone, yet the march towards a formal legal framework is going to be long.
{"title":"The Long March towards an International Legal Framework for Sovereign Debt Restructuring","authors":"Yuefen Li","doi":"10.1515/jgd-2015-0028","DOIUrl":"https://doi.org/10.1515/jgd-2015-0028","url":null,"abstract":"Abstract The lack of a formal sovereign debt restructuring legal framework has been considered by many as a serious deficit or missing link in the international financial architecture. However, even though the international debates on the topic have been going on for decades, heating up each time with the onset of a debt crisis and cooling down when the crises was contained, up to now such debates have not yet come to final fruition. Nevertheless the topic has never been put to sleep because of frequent and severe debt crises. These crises have never failed to demonstrate the need of a legal framework, even more so this time around. Yet, the international community chose to work on improvement of debt contracts even though it cannot redress the systemic and technical problems facing debt restructurings. In 2014, the United Nations started to work on a legal framework on debt restructuring facing political resistance and misconstrued fears of a legal framework. After more than a year’s hard work, the United Nations passed through vote a resolution on basic principles on debt restructuring processes. This is an important milestone, yet the march towards a formal legal framework is going to be long.","PeriodicalId":38929,"journal":{"name":"Journal of Globalization and Development","volume":"6 1","pages":"329 - 341"},"PeriodicalIF":0.0,"publicationDate":"2015-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1515/jgd-2015-0028","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"66940044","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract The paper studies the nature and extent of Egyptian “crony” capitalism by comparing the corporate performance and the stock market valuation of politically connected and unconnected firms, before and after the 2011 popular uprising that led to the end of President Mubarak rule. First, we identify politically connected firms and compare the corporate behavior of connected and unconnected large firms before 2011 in terms of their levels of debts, market share, and tax payment. Second, we conduct an event study around the events of 2011 and estimate the market valuation of political connections. Third, we attempt to decompose the extra value that the market attributes to political connections between a current profitability advantage, and future advantages that include higher growth opportunities and (implicit) bail-out guarantees.
{"title":"Crony Capitalism in Egypt","authors":"H. Chekir, Ishac Diwan","doi":"10.1515/jgd-2014-0025","DOIUrl":"https://doi.org/10.1515/jgd-2014-0025","url":null,"abstract":"Abstract The paper studies the nature and extent of Egyptian “crony” capitalism by comparing the corporate performance and the stock market valuation of politically connected and unconnected firms, before and after the 2011 popular uprising that led to the end of President Mubarak rule. First, we identify politically connected firms and compare the corporate behavior of connected and unconnected large firms before 2011 in terms of their levels of debts, market share, and tax payment. Second, we conduct an event study around the events of 2011 and estimate the market valuation of political connections. Third, we attempt to decompose the extra value that the market attributes to political connections between a current profitability advantage, and future advantages that include higher growth opportunities and (implicit) bail-out guarantees.","PeriodicalId":38929,"journal":{"name":"Journal of Globalization and Development","volume":"5 1","pages":"177 - 211"},"PeriodicalIF":0.0,"publicationDate":"2014-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1515/jgd-2014-0025","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"66939855","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract This paper develops a small open economy model with three sectors and four factors – land, unskilled labour, skilled labour and capital. Two of these three sectors produce final traded goods of which one sector produces an agricultural product using land and unskilled labour and another sector produces a manufacturing product using skilled labour and capital. The third sector, called education sector produces a service using skilled labour and capital as inputs; and this service transforms unskilled workers into skilled workers. The current output is added to the existing stock of skilled labour at the next point of time. The paper first analyses various comparative static effects on skilled-unskilled relative wage in the static model where no factor endowment changes over time. Next, it analyses the long-run equilibrium properties in the dynamic model with intertemporal accumulation of skilled labour; and derives various comparative steady state effects on skilled unskilled relative wage. Comparative steady-state effects appear to be stronger than the corresponding comparative static effects.
{"title":"Skilled-Unskilled Wage Inequality, Growth of Skilled Labour and Development Policies","authors":"M. Gupta, P. Dutta","doi":"10.1515/jgd-2012-0022","DOIUrl":"https://doi.org/10.1515/jgd-2012-0022","url":null,"abstract":"Abstract This paper develops a small open economy model with three sectors and four factors – land, unskilled labour, skilled labour and capital. Two of these three sectors produce final traded goods of which one sector produces an agricultural product using land and unskilled labour and another sector produces a manufacturing product using skilled labour and capital. The third sector, called education sector produces a service using skilled labour and capital as inputs; and this service transforms unskilled workers into skilled workers. The current output is added to the existing stock of skilled labour at the next point of time. The paper first analyses various comparative static effects on skilled-unskilled relative wage in the static model where no factor endowment changes over time. Next, it analyses the long-run equilibrium properties in the dynamic model with intertemporal accumulation of skilled labour; and derives various comparative steady state effects on skilled unskilled relative wage. Comparative steady-state effects appear to be stronger than the corresponding comparative static effects.","PeriodicalId":38929,"journal":{"name":"Journal of Globalization and Development","volume":"5 1","pages":"103 - 128"},"PeriodicalIF":0.0,"publicationDate":"2014-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1515/jgd-2012-0022","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"66939485","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract In this paper we examine how policymakers and practitioners should interpret the impact evaluation literature when presented with conflicting experimental and non-experimental estimates of the same intervention across varying contexts. As is well known, non-experimental estimates of a treatment effect comprise a causal treatment effect and a bias term due to endogenous selection into treatment. When non-experimental estimates vary across contexts any claim for external validity of an experimental result must make the assumption that (a) treatment effects are constant across contexts, while (b) selection processes vary across contexts. This assumption is rarely stated or defended in systematic reviews of evidence. As an illustration of these issues, we examine two thoroughly researched literatures in the economics of education – class size effects and gains from private schooling – which provide experimental and non-experimental estimates of causal effects from the same context and across multiple contexts. We show that the range of “true” causal effects in these literatures implies non-experimental estimates from the right context are, at present, a better guide to policy than experimental estimates from a different context. We conclude with recommendations for research and policy, including the need to evaluate programs in context, and avoid simple analogies to clinical medicine in which “systematic reviews” attempt to identify best-practices by putting most (or all) weight on the most “rigorous” evidence with no allowance for context.
{"title":"Context Matters for Size: Why External Validity Claims and Development Practice do not Mix","authors":"L. Pritchett, J. Sandefur","doi":"10.1515/jgd-2014-0004","DOIUrl":"https://doi.org/10.1515/jgd-2014-0004","url":null,"abstract":"Abstract In this paper we examine how policymakers and practitioners should interpret the impact evaluation literature when presented with conflicting experimental and non-experimental estimates of the same intervention across varying contexts. As is well known, non-experimental estimates of a treatment effect comprise a causal treatment effect and a bias term due to endogenous selection into treatment. When non-experimental estimates vary across contexts any claim for external validity of an experimental result must make the assumption that (a) treatment effects are constant across contexts, while (b) selection processes vary across contexts. This assumption is rarely stated or defended in systematic reviews of evidence. As an illustration of these issues, we examine two thoroughly researched literatures in the economics of education – class size effects and gains from private schooling – which provide experimental and non-experimental estimates of causal effects from the same context and across multiple contexts. We show that the range of “true” causal effects in these literatures implies non-experimental estimates from the right context are, at present, a better guide to policy than experimental estimates from a different context. We conclude with recommendations for research and policy, including the need to evaluate programs in context, and avoid simple analogies to clinical medicine in which “systematic reviews” attempt to identify best-practices by putting most (or all) weight on the most “rigorous” evidence with no allowance for context.","PeriodicalId":38929,"journal":{"name":"Journal of Globalization and Development","volume":"4 1","pages":"161 - 197"},"PeriodicalIF":0.0,"publicationDate":"2014-03-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1515/jgd-2014-0004","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"66940213","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract Can sanctions against foreign aid donors enhance the credibility of conditional aid policies? If such policies suffer from time inconsistency, the answer is positive. This paper proposes a mechanism to overcome the lack of credibility of conditional aid donations to developing countries. A scheme of policy-dependent transfers to the donor country is shown to achieve an optimal commitment outcome by improving the credibility of conditional aid programs. The scheme is devised to cover situations in which the cost of structural reforms is information privately owned by the recipient government.
{"title":"Incentives for Conditional Aid Effectiveness","authors":"Francisco Candel-Sánchez","doi":"10.1515/jgd-2012-0018","DOIUrl":"https://doi.org/10.1515/jgd-2012-0018","url":null,"abstract":"Abstract Can sanctions against foreign aid donors enhance the credibility of conditional aid policies? If such policies suffer from time inconsistency, the answer is positive. This paper proposes a mechanism to overcome the lack of credibility of conditional aid donations to developing countries. A scheme of policy-dependent transfers to the donor country is shown to achieve an optimal commitment outcome by improving the credibility of conditional aid programs. The scheme is devised to cover situations in which the cost of structural reforms is information privately owned by the recipient government.","PeriodicalId":38929,"journal":{"name":"Journal of Globalization and Development","volume":"5 1","pages":"102 - 75"},"PeriodicalIF":0.0,"publicationDate":"2014-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1515/jgd-2012-0018","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"66939435","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract This article questions the relevance of the different measures of policy performance that are currently used by international organizations to allocate development aid. It evaluates more especially the pertinence of the World Bank’s Country Policy and Institutional Assessment (CPIA). Using a cross-country panel dataset over 146 countries between 1977 and 2008, I show that while the CPIA is correlated with current growth, it is not a good predictor for future growth. I then discuss the relevance of several instruments for aid allocation. In particular, I propose a performance indicator based on “aid effectiveness” to allocate aid selectively, and discuss a new way of assessing time-varying aid effectiveness.
{"title":"Improving upon the World Bank’s Country Policy and Institutional Assessment: A New Performance Indicator Based on Aid Effectiveness","authors":"Julia Cagé","doi":"10.1515/jgd-2013-0007","DOIUrl":"https://doi.org/10.1515/jgd-2013-0007","url":null,"abstract":"Abstract This article questions the relevance of the different measures of policy performance that are currently used by international organizations to allocate development aid. It evaluates more especially the pertinence of the World Bank’s Country Policy and Institutional Assessment (CPIA). Using a cross-country panel dataset over 146 countries between 1977 and 2008, I show that while the CPIA is correlated with current growth, it is not a good predictor for future growth. I then discuss the relevance of several instruments for aid allocation. In particular, I propose a performance indicator based on “aid effectiveness” to allocate aid selectively, and discuss a new way of assessing time-varying aid effectiveness.","PeriodicalId":38929,"journal":{"name":"Journal of Globalization and Development","volume":"142 1","pages":"213 - 233"},"PeriodicalIF":0.0,"publicationDate":"2014-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1515/jgd-2013-0007","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"66940133","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract This paper considers the effect of financial liberalisation on access to investment finance using firm level data covering 48 developing and transition countries. An index is presented which measures financial market liberalisation along the following policy dimensions: directed lending, credit controls and reserve requirements, state control of banking, openness of international financial flows, banking market entry, prudential regulation and supervision and securities market development. Categorising firms as financially constrained across four measures, the results indicate that financial liberalisation is robustly associated with a reduction in the probability of being credit constrained, with the effect strongest for young, domestic private small and medium sized enterprises. For Sub-Saharan Africa, the results indicate that financial liberalisation actually increases financing constraints for firms. This may help explain the stylised fact that despite a commitment to financial reform, the predicted growth benefits have not been realised in this region.
{"title":"Does Financial Liberalisation Improve Access to Investment Finance in Developing Countries?","authors":"C. O’Toole","doi":"10.1515/jgd-2013-0028","DOIUrl":"https://doi.org/10.1515/jgd-2013-0028","url":null,"abstract":"Abstract This paper considers the effect of financial liberalisation on access to investment finance using firm level data covering 48 developing and transition countries. An index is presented which measures financial market liberalisation along the following policy dimensions: directed lending, credit controls and reserve requirements, state control of banking, openness of international financial flows, banking market entry, prudential regulation and supervision and securities market development. Categorising firms as financially constrained across four measures, the results indicate that financial liberalisation is robustly associated with a reduction in the probability of being credit constrained, with the effect strongest for young, domestic private small and medium sized enterprises. For Sub-Saharan Africa, the results indicate that financial liberalisation actually increases financing constraints for firms. This may help explain the stylised fact that despite a commitment to financial reform, the predicted growth benefits have not been realised in this region.","PeriodicalId":38929,"journal":{"name":"Journal of Globalization and Development","volume":"5 1","pages":"41 - 74"},"PeriodicalIF":0.0,"publicationDate":"2014-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1515/jgd-2013-0028","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"66940188","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract A frequent charge in foreign exchange markets in developing countries is that of manipulators being at work. Since to buy is to raise prices and to sell is to lower prices, the question that naturally arises is whether the widespread charge of market manipulation is valid. The paper shows that (whether or not “widespreadness” has any merit) it is possible for a player to manipulate and profiteer. By using some simple principles of game theory, the paper outlines a strategy that a manipulator may use. The aim of this paper is not to provide a manual for the manipulator but to enable the regulator to understand the art and develop policies to curb manipulation.
{"title":"The Art of Currency Manipulation: How Some Profiteer by Deliberately Distorting Exchange Rates","authors":"K. Basu","doi":"10.1515/jgd-2013-0040","DOIUrl":"https://doi.org/10.1515/jgd-2013-0040","url":null,"abstract":"Abstract A frequent charge in foreign exchange markets in developing countries is that of manipulators being at work. Since to buy is to raise prices and to sell is to lower prices, the question that naturally arises is whether the widespread charge of market manipulation is valid. The paper shows that (whether or not “widespreadness” has any merit) it is possible for a player to manipulate and profiteer. By using some simple principles of game theory, the paper outlines a strategy that a manipulator may use. The aim of this paper is not to provide a manual for the manipulator but to enable the regulator to understand the art and develop policies to curb manipulation.","PeriodicalId":38929,"journal":{"name":"Journal of Globalization and Development","volume":"4 1","pages":"199 - 211"},"PeriodicalIF":0.0,"publicationDate":"2014-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1515/jgd-2013-0040","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"66940200","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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