This paper addresses the question of how exchange rates affect consumer demand in markets where advertising plays an important role. We identify an effect that has not been emphasized in the existing literature: when foreign exchange rates appreciate, a foreign product becomes more expensive to domestic consumers, but at the same time, advertising becomes cheaper for the foreign advertiser. Thu...

This paper studies foreign exchange risk premium using the uncovered interest rate parity framework in a single country context. The analysis is performed using weekly data on foreign and domestic currency deposits in Armenian banking system. The paper provides the results of the simple tests of uncovered interest parity condition, which indicate that contrary to established view dominating in ...

We explicitly consider strategic interaction between governments to study currency competition and its effects on the circulation of currencies and welfare in a two-country twocurrency search theoretic model. Each government finances public goods by means of seigniorage. Compared with a regime with two local currencies, a regime with one international currency allows the issuer of the internati...

In this paper, we study data from financial markets, using the normalised Mutual Information Rate. We show how to use it to infer the underlying network structure of interrelations in the foreign currency exchange rates and stock indices of 15 currency areas. We first present the mathematical method and discuss its computational aspects, and apply it to artificial data from chaotic dynamics and...

abstract financial crises and currency instabilities within developing and emerging economies during the last decade had a tremendous impact on the economic performance and increased vulnerability of economies against domestic and foreign shocks. the timing of capital liberalization is one of the significant debates among other issues related to currency instability, and it would be more conven...

We study the price discovery in a foreign exchange electronic limit order market on a daily basis, by examining the informativeness of ask and bid quotes in the process of price formation. Using the data of prices and trades in the Euro–Dollar spot market via Electronic Broking Services (EBS), we find bid quotes provide more price discovery. This dominance of bid quotes in price discovery is st...

The paper develops an alternative hypothesis that attributes collateral responsibility for therecent spate of financial crises to a basic flaw of the architecture of the international financialsystem, free markets for foreign exchange. A valid positional distinction between reserve/ hardand soft currencies, based on reputation, accounts for the systematic substitution of the former<...