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3 posts on "economic activity"
April 12, 2023

Does Corporate Hedging of Foreign Exchange Risk Affect Real Economic Activity?

Digitally Generated Image - World Currency Rates

Foreign exchange derivatives (FXD) are a key tool for firms to hedge FX risk and are particularly important for exporting or importing firms in emerging markets. This is because FX volatility can be quite high—up to 120 percent per annum for some emerging market currencies during stress episodes—yet the vast majority of international trades, almost 90 percent, are invoiced in U.S. dollars (USD) or euros (EUR). When such hedging instruments are in short supply, what happens to firms’ real economic activities? In this post, based on my related Staff Report, I use hand-collected FXD contract-level data and exploit a quasi-natural experiment in South Korea to measure the real effects of hedging using FXD.

Posted at 7:00 am in Financial Markets, Regulation | Permalink
February 13, 2023

How Much Can the Fed’s Tightening Contract Global Economic Activity?

Decorative: illustration with the world map, infographics and numbers. International finance, trade and economy concept.

What types of foreign firms are most affected when the Federal Reserve raises its policy rate?  Recent empirical research used cross-country firm level data and information on input-output linkages and finds that the impact on sales and investment spending is largest in sectors with exposure to trade in intermediate goods. The research also finds that financial factors drive differences, with U.S. monetary policy spillovers having a much smaller impact on firms that are less financially constrained.

August 24, 2011

Just Released: July’s Indexes of Coincident Economic Indicators Show Economic Activity Picking Up across the Region

The July Indexes of Coincident Economic Indicators (CEIs) for New York State, New York City, and New Jersey, released today, reveal that economic activity continued to expand in both New York State and New York City and—for the second month in a row—picked up moderately in New Jersey.

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