Simon Lloyd, Daniel Ostry and Balduin Bippus How much capital flows move exchange rates is a central question in international macroeconomics. A major challenge to addressing it has been the difficulty identifying exogenous cross-border flows, since flows and exchange rates can evolve simultaneously with factors like risk sentiment. In this post, we summarise a staff … Continue reading The granular origins of exchange-rate fluctuations
international finance
Luke Heath Milsom, Vladimír Pažitka, Isabelle Roland and Dariusz Wójcik Exports of financial services decline with geographical distance at a rate comparable to that for international trade in goods (eg, Portes and Rey (2005)). This is surprising since there are no transportation costs involved. The consensus is that distance is a proxy for information frictions. … Continue reading The gravity of cross-border syndication ties in financial services trade