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| the price of one currency stated in terms of a second currenty |
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| risk as to a change in valuation that stems from constantly changing currenty value |
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| price that will be delivered in future |
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| future delivery buyin and selling takes place today |
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| ptotect against fx risk method |
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| covered interest arbitrage |
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| use fwd market to cover fx risk |
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| increase in value in comparision to a flexible/flating exchange rate |
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| equilibrium value of an exchange rate is that level that allows given amount of money to buy the same quantity abroad that it does at home |
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| fx relationship. notion that interest rate differential between two countries is approximately equal to the percentage difference between the forward and spot exchange rates |
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| market exchange rate adjusted for price differences |
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| fixed exchange rate (Bretton Woods exchange rate system fixed after WWII on gold |
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| similar to gold standard instead its pegged to an anchor currency. |
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| fixed peg that is periodically adjusted |
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| ccasionally buy and sell curency to nudge the exchange rates |
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| financial issue within a cuntry |
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| effects of a crisis that do not conform to a single pattern and reinforce the idea that there are different types of crises with their own rules/behavior |
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| international financial architecture |
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| banking system cannot perform normal lending functions |
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| a failure on the part of the banking system that prevents savings from being channeled into investments |
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| sudden and unexpected collapse in the value of anation's currency. |
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| government plan to reduce expendigure and rasie taxes to decrease deficit |
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| incentive to withhold information or to act in a selfish way |
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| politicians aand business people helping themselves |
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| adopted by more than 100 countries in 1989: |
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| National controls on the inflow and/or outflow of funds |
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| changes in economic policy that borrowing nations are required to make in order to receive IMF loans |
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| installments on imf loans with different conditionalities |
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| collective action clauses |
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| all international bond loans. Require each lender to agree to a collective mediation between all lenders and the debtor. |
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| CUSTa (Canada-uS trade agreement |
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| began in 1989 when canada/mexico trade was smal |
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| an adjustment to exchange rates or incomes designed to keep constant the real purchasing power of money when converted from one currency to another |
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| agreement between CA andd USA limited to automotive prices gains from trade. Removed barriers to trade |
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| ISI- import substitution industralization |
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| an economic development strategy that emphasizes the domestic production of goods that substitute for imports- decreases imports & exports |
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| indernational debt relief plan in 1989 Mexico first to qualify for partical debt forgiveness |
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| North American Agreement on Labor cooperation |
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| dealing with envrionmental issues. Enforce their onw labor laws in each country and permit the other to do it, including levying fines. |
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| Nother American Agreement on Envrionmental Cooperation |
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| two concerns: prevent firms from relocating to mexico where they can take advantage of the evnionmental enforcement looseness. Polution along the US mexico border. |
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| helps to finance border cleanup costs. |
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| demand-pull/supply-push/social network |
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| define which goods qualify for free trade and which are imports from outsdie the region. |
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| latin american debt crisis in 1982l growth was negative, high inflation, powverty |
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| ISI- import substitution industralization |
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| economic policy reform in latin america ended this every country treated it contentiously b/c it rendered them inable to solve the crisis. |
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| index of export prices/indexof import prices |
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| Commission on Latin America |
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| export pessimism formed the basis for this policty: guided policies throughout latin america |
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| assumed more common in developing nations than in industrial ones. |
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| economic policies emphasizing growth and redistribution that simultaneously de-emphasize inflation risks, deficit finance, external constraints, and the reactions of economic agents |
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| tried to organize a renewed lending program by commerical banks. Latin America |
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| creditors restructured some old debt,multilaterial lending agencies provided loans on concessional terms, borrowers had to provide evidence of their willingness to begin serious economic refmor |
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| partial return to classic 19th century european liberalism. Free markets and minimal government intervention. |
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| designed to cure inflation by cutting government spending, limiting the creation of new money, and reforming the tax system |
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| high performance asian economicies |
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| hong kong, indonesia, japan, amalysia, singapore, south korea, taiwan and thiland. HIGH GROWTH RATES AND DECLINING POVERTY |
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| rapid economic growth after Japan: hong Kong, singapore, south Korea and Taiwan |
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| Newly Industrializing Economies |
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| not confined to east Asia: growth rates are high. |
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| the shift from high birth rates & high death rates to low birth and low death rates |
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| quasi-legislative bodies that bring together reps from private and public sectors |
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| Asn of Southeast Asian Nations |
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| most notable example of Asian cooperation agreement prior fo the 19902. |
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| lending currency reserves to the someone else. |
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| TFP Total factor productivity |
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| changes in output that are unrelated to changes in capitalor labor inputs but are related to new technoligies, innovation and organizational improvements |
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| Foreign Trading Corporation |
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| 12 FTCS control trade under the old system in china |
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| special region in China in which local officials are encouraged to experiment with new economic policies- encourage FDI & exports |
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| township and village enterprises (TVE) |
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| are able to resond quickly to local conditions b/c their interest are more alighned with local communities. |
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| any activity by firms, individuals, or special interests that is designed to alter the distribution of income to their favor |
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| Export Processing Zone (EPZ) |
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| a geographical region in which firms are free from tariffs as long as they export the goods that are made for imports- encourages exports |
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| the adoption of a foreign currency in place of a country's domestic currency |
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| downward pressure on labor, environmental or other standards that come with pricing competition |
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| minimizing government involvement in the economy & freezing of wages & prices |
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