Exchange rate policy modeling and forecasting the exchange rate: Indian rupee vis‐à‐vis the U.S. dollar

The exchange rate is a very important key financial variable that affects decisions made by the foreign exchange investors, exporters, importers, bankers, businesses, financial institutions, policymakers, and tourists in the developed as well as the developing world. Exchange rate fluctuations affect the value of international investment portfolios, competitiveness of exports and imports, value of international reserves, currency value of debt payments, and the cost of tourists. Movements in exchange rates thus have very important implications for any country's economy's business cycle, trade, and capital flows and are therefore crucial for understanding financial developments and changes in economic policy. The study will be looking at the various aspects of country's economic policy with respect to the exchange rate and modeling and forecasting the exchange rate. The study will be analyzing India's exchange rate story and will be discussing the structure of the foreign exchange market in India in terms of participants, instruments, and trading platform as also a turnover in the Indian foreign exchange market and forward premia. The study will be attempting to develop a model for the rupee–dollar exchange rate taking into account variables from monetary and microstructure models as well as other variables including intervention by the central bank. The main focus will be on the exchange rate of the Indian rupee vis‐à‐vis the U.S. dollar, that is, the Re/$ rate. The data will be covering from January 1990 through April 2013. This study will be examining the forecasting performance of the monetary model and various extensions of it in the vector autoregressive and Bayesian vector autoregressive framework.     

Central Bank Independence and Deflation

Deflation presents special challenges to central banking, as traditional monetary policy tools are highly inefficient in dealing with deflationary pressures. In this case, the Federal Reserve must use alternative monetary policy tools that are specially designed to artificially boost asset prices through “printing press” or currency manipulation. Unfortunately, these alternative monetary policy tools create unintended political, geopolitical, and social consequences that overreach into the direct responsibilities of other branches of government. Thus, the government must be able to influence Federal Open Market Committee decisions that potentially affect (or contradict) U.S. foreign policy, U.S. trade policy, U.S. dollar policy, and deliberate domestic/global wealth distribution policies.     

The Launching of the EMS: An Analysis of Change in Foreign Economic Policy

Foreign exchange markets are subject to changing international regimes. When and why regimes change is a legitimate focus of political study. This is particularly so as shifts in foreign exchange markets modify relative prices in and between national economies. Authorities presiding over foreign exchange markets are answerable to their national policy communities and to their national electorates. They also operate within an international state system. Applying John S. Odell's framework to an analysis of the launch of the European Monetary System (EMS) in April 1978 by Chancellor Schmidt and President Giscard d'Estaing, it is argued that a market perspective alone would have failed to predict the establishment of the EMS. An analysis of the principal actors and their ideas; of the power political constellation; and of the domestic context in the Federal Republic and in France, contributes most to explaining ex post the shift towards a European managed exchange rate regime. In this case, the neoclassical M arket perspective provided erroneous, inadequate and subsidiary explanations. The article suggests that foreign exchange policy and therefore global financial markets belong firmly in the realm of international and comparative political studies. They are too important to be left to economists alone.     

Ubuntu diplomacy: Broadening soft power in an African context

Ubuntu is an African philosophical worldview that has increasingly gained prominence since South Africa's democratic transition in 1994. It places emphasis on the world's common humanity and its consequent interdependence. Through content analysis, the article examines the soft power that is inherent in South Africa's foreign policy, as codified in the 2011 White Paper on South African Foreign Policy–Building a Better World: Diplomacy of Ubuntu. In its findings, the article established a distinction between Joseph Nye's original conceptualization of soft power, formulated from a United States realist foreign policy perspective, and the one inherent in South Africa's humanist foreign policy guided by the philosophy of Ubuntu. This distinction is premised on the geopolitical disparities between the two nations. The article further examines South Africa's wielding of soft power within the African continent, the first audience of the country's diplomacy of Ubuntu.     

China's dualist model on technological catching up: a comparative perspective

Abstract

The central question of this paper is whether China can go beyond simple technological transfer and toward innovation in this age of globalization. By adopting an institutionalist perspective, this paper argues that China has developed a dualist model during its economic transitional period in which the foreign sector has been isolated from domestic firms, while the domestic industrial sectors have also failed to develop organic linkages among themselves to facilitate technological learning and generate innovation. This paper discusses four major institutional arrangements that deeply influence China's technological development – the institutional logic of economic reform, the state's industrial policy, the financial system and the industrial structure. It suggests that, owing to these institutional elements, China has neither developed economies of scale, as compared with the South Korean case, nor has it built up a network-type of economy similar to its Taiwanese counterpart in order to generate the mechanisms needed for technological innovation.     

Does the @realDonaldTrump Really Matter to Financial Markets?

Does the @realDonaldTrump really matter to financial markets? Research shows that new information about the likely future policy direction of government affects financial markets. In contrast, we argue that new information can also arise about the likely future government's resolve in following through with its policy goals, affecting financial markets as well. We test our argument using data on U.S. President Donald J. Trump's Mexico-related policy tweets and the U.S. dollar/Mexican peso exchange rate. We find that Trump's Mexico-related tweets raised Mexican peso volatility while his policy views were unknown as well as thereafter, as they signaled his resolve in carrying out his Mexico-related agenda. By helping politicians disseminate policy information to voters, and since voters hold governments accountable for their policy performance, social media allows investors to gather information about the likely policy direction and policy resolve of government, especially those of newcomers whose direction and resolve are unknown.     

The domestic politics of international development in South Korea: stakeholders and competing policy discourses

Abstract

The paper examines the domestic politics surrounding South Korea's foreign aid policy. It delineates the institutional characteristics and strategic interests of key government and non-government stakeholders, and suggests an analytical framework to comprehend the country's aid policy regime. It suggests that two competing policy discourses exist – one emphasising ‘intellectual leadership’ and the other ‘ethical leadership’ as the key principle of aid policy. In practice, the country's political leadership promulgates a complex amalgam of these discourses in alignment with their own political imperatives and interests. The paper discusses ‘Global Saemaul Undong’ as such an example under the incumbent Park Geun-Hye administration.     

US Fed taper to have global impact

Driven by domestic considerations, the US Federal Reserve's decision to begin scaling back its purchases of US Treasury and mortgage-backed bonds will have implications for currency and investment markets around the world. Among the emerging economies most exposed to adverse market developments are those of Brazil, India, Turkey and South Africa.     

Domestic actors and agendas in Chinese aid policy

Abstract

As China's aid has increased, so has scrutiny by the international development and foreign policy community. Despite recognition that foreign aid policy is a result of domestic political contests, the existing literature tends to overlook Chinese debates about the purpose of aid, and how that purpose should be achieved. This paper argues that examining these debates shows that Chinese aid is not a well-considered element of an overarching strategy. Rather, where foreign aid is considered relevant vis-à-vis China's goals, its use is hotly contested. Competing actors' varying agendas, rather than any coherent strategy, underpin inchoate aid projects.     

Iran's active neutrality during the Kuwaiti crisis: Reasons and ramifications

Abstract

Since the death of Ayatollah Khomeini in 1989, Iranian foreign policy has become increasingly moderate. Iran's active neutrality during the Iraqi occupation of Kuwait is symptomatic of this moderation. The policy of active neutrality became possible because Rafsanjani centralized the foreign policy decision‐making process before the start of the crisis and introduced his “new‐thinking” in the Persian Gulf. This new thinking was a part of his strategy to rebuild Iran's shattered economy and to improve relations with the West and with the Arabs of the Persian Gulf.

Without a single shot and without any casualty, Iran benefited enormously from the Kuwaiti war. Rafsanjani's domestic opponents were weakened. Iranian financial gains were significant. Iran's negative image improved. Relations improved with the West and with the Arab nations of the region. And the military and economic infrastructures of Iraq, Iran's archenemy, were seriously damaged, making Iran the region's most powerful indigenous force.

This article is partially based on interviews with Iranian policy‐makers conducted in 1991.     

The political obstacles to economic reform in North Korea: The ultra cautious strategy in comparative perspective

As a result of the financial crisis, some commentators see the reform process in the East Asian states as an outcome of the disciplining behaviour of financial markets that will lead to the emergence of a neoliberal form of capitalism. The Malaysian experience suggests, however, that progress to neoliberal forms of economic organization will not be inevitable, despite governments having to increasingly accommodate global markets. In Malaysia, the degree to which a neoliberal adjustment response could be embraced was limited by domestic political factors. First, the government needed to maintain the ethnic based distributive policy that favours ethnic Malays with material entitlements for reasons of state and regime security. Second, the state was not wholly insulated from a key social group that emerged as a result of the ethnic-based distributive policy, namely an elite Malay corporate group. A third reason was economic nationalism, a major component of Prime Minister Mahathir's vision for the country that stressed the building up of Malaysian corporations and conglomerates. Access to domestic sources of funds for adjustment and the centralization of power in the government, particularly in the office of the Prime Minister, facilitated this process of defending national economic arrangements, at least during the period in question. The limited liberalization of the ethnic based distributive policy did not, however, imply a shift in the ideological and policy agenda towards complete embrace of neoliberal norms and practices. The imposition of capital controls, although announced as a temporary measure to allow space for the government to pursue its preferred course of adjustment, further indicates that the commitment to free markets in Malaysia is instrumental. The Malaysian case suggests that movement towards neoliberal forms of economic organization as a result of the financial crisis may be limited and is not inevitable.     

Post‐1994 South Africa's peacekeeping and military intervention in Southern Africa,reference from the Democratic Republic of Congo (DRC) and Lesotho

South Africa, once a pariah state as a result of the apartheid regime destabilization policies in Southern Africa, became a full fledge democratic state following the victory of the African National Congress (ANC) in the first and all‐inclusive democratic elections of 1994. The ANC's vision for Southern Africa was to be routed on the notion of curbing the imbalances of the past (pre‐1994), which had cost the Southern African region great economic loss. Here, one of the many fundamentals that were to drive the ANC's foreign policy doctrine was that of conflict resolution for a more stable and prosperous Africa particularly Southern Africa. Conflict resolution was viewed as a pivotal element for the new democratic government in order to stimulate beneficial relations with other African states post the apartheid era. In light of the above, and using a qualitative method approach, this paper draws a nuanced appraisal and examines the role of South Africa's peacekeeping and mediation initiatives in the Democratic Republic of Congo (DRC) and Lesotho post‐1994. In conclusion, South Africa has been able to utilize its regional hegemonic stance to ensure regional security while ensuring economic stability at home.     

THE IMPACT of FINANCIAL SERVICES GLOBALIZATION UPON the CARIBBEAN COMMON MARKET

This article tests three hypotheses concerning the policy effects of foreign exchange market liberalization and exchange controls in the three Caribbean Common Market countries of Jamaica, Trinidad & Tobago, and Barbados during the 1990s. It concludes that these cases do not show either monetary or fiscal policy to be particularly effective, when foreign exchange markets are liberalized before a functional bank regulatory system is put in place. These cases also imply that given the challenges posed by financial services globalization, the need for informed judgment by governments regarding the pace and scope of financial sector liberalization will remain critical, particularly within small developing countries.     

From asset to patrimony: the re-emergence of the housing question

Abstract

The global financial crisis has ushered in a major housing crisis in many European countries. The paper seeks to shed light on why, despite massive housing crises, there are few policy efforts at tackling it. Probing into the policy paradigms that have informed housing policies, the paper demonstrates a shift towards housing as an asset before the crisis. Increasingly, housing policies have become interwoven with financial markets. This has led to a major policy mismatch after the crisis: while the return of the ‘housing question’ would have required renewed efforts at establishing housing as a social right, de facto policy makers sought to stabilise financial markets. The result is a paradoxical outcome, where neoliberal market-driven programmes are embedded in increased dependence on family wealth. The article demonstrates the shift from housing as asset to housing as patrimony in three different varieties of residential regimes, represented by Ireland, Denmark and Hungary.     

China's engagement in South America and Africa's extractive sectors: new perspectives for resource curse theories

Abstract

China's engagement in South America and Africa's extractive sectors has increased significantly in the last decade. How comparable are the African and South American cases from a developmental perspective? This article explores resource curse theories, arguing that the ‘curses’ often associated to extraction are historically produced dynamic processes that need to be reevaluated in light of China's direct and indirect impacts on resource-endowed countries. It elaborates a framework to compare the developmental dynamics entailed by China's involvement in the South American and African extractive sectors, distinguishing between external, internal and intrinsic ‘curses’. The article holds that China's growth and investment have strengthened the position of resource-endowed countries in the international economy, revitalizing resource industries and improving terms of trade for commodities. Concurrently, the expansion of extractive activities has brought about increased environmental and economic sustainability challenges. Divergences between the African and South American cases are best observed at the national levels, where China's non-interventionist approach has different developmental implications depending on internal trends within investment host countries.     

The unwinding of South Africa’s foreign policy

South African President Jacob Zuma's corrupt personalisation of foreign policy, systematic government mismanagement and rising xenophobia are marginalising South Africa in continental and international affairs. Restoring South Africa to its leadership standing will be a major priority for his successor and the next government.     

CAPITAL MOBILITY, DOMESTIC POLITICS, and FRENCH MONETARY DIPLOMACY

This article evaluates the role of increased capital mobility, sectoral interests, and domestic institutions in bringing about policy change in French capital markets. Capital mobility played an indirect role by making it more costly for French governments to pursue inflationary economic policies. But it was domestic politics, not capital mobility, that led governments to achieve lower inflation by stabilizing the exchange rate. The key domestic political factor was institutional change to regulatory practices, while financial markets reduced bank lending to industry and internationalized French finance, breaking the strong ties and comon monetary diplomacy interests of bankers, industralists, and policymakers, and thereby weaken the political priority of promoting domestic growth and industrial competitiveness.     

South Africa's integration efforts within the Southern African Development Community: Regional supremacy or coalition?

Regional integration has manifested itself to be an integral part of Africa's postcolonial economic growth blueprints. It was viewed as a mechanism for African states to enhance their development and work collectively, improve their cooperation, and enhance peace and security. Nevertheless, regional integration initiatives are often seen to succeed when spearheaded by regional hegemons. By narrowing this to southern Africa, from 1994 after the first-ever democratic elections and after also becoming a member of the Southern African Development Community (SADC), South Africa was regarded as a state capable of spearheading regional integration. This was a result of its relatively robust economy and military power in comparison with other SADC states. As a result, it was poised to utilize these vast resources to the benefit of the SADC. However, over the last two and a half decades, its regional stance has often come under a lot of scrutinizing due to its ambiguous foreign policy doctrine, particularly in southern Africa. Basically, its post-1994 foreign policy projections towards the region have often not been implemented as attested and have often lacked clear articulation. Nevertheless, this paper argues that South Africa has made positive strides in the SADC's regional integration endeavors post its democratic transition. Its vast regional investments and diplomatic and military interventions have played a crucial role in the development and security reforms in the region. Although it is portrayed as a regional hegemon, it has nevertheless used its regional standpoint to the benefit of the region and further contributed to regional integration post the apartheid era.     

我国外汇储备增长的影响因素与实证检验

近年来,我国外汇储备呈现快速增长态势。本文从分析我国外汇储备快速增长的原因出发,利用协整分析方法对影响我国外汇储备的因素进行实证研究。结果表明,影响我国外汇储备的因素主要包括汇率、国内生产总值、外贸开放度等,而外资开放度和外债余额对外汇储备的影响不显著。     

Japan's military research and development: A high technology deterrent

Abstract

This article examines the increased linkage between domestic and foreign policy that has been a consequence of democratization and globalization in Korea. It argues that while prior to 1987 foreign policy-making saw very little public input, and while democratization did not lead to a weakening of domestic political institutions nor a rise in nationalism, it did open up domestic political space where foreign policy-making increasingly became part of the contentious electoral competition. The globalization policy, initiated with the purpose of raising Korea's international status, which has remained a goal of succeeding administrations, created a complex interdependency which led to a breakdown in the separation between the domestic and international, and that often brought with it a domestic backlash. As a consequence foreign policy-making, in the absence of a tradition of political compromise, increasingly runs the risk of either inconsistency, or even deadlock.