Macroeconomics Commons^™

Why The World Needs A Reserve Asset With A Hard Anchor, Warren Coats, Dongsheng Di, Yuxuan Zhao

Warren Coats

From the 1970s, the global currency system has two features: the use of one or a few sovereign currencies as the global reserve asset and the floating exchange rate regime between major currencies.This paper points out that the costs of the dollar’s use as an international reserve currency exceed the benefits for both the US and the rest of the world. These costs include the exporting of American manufacturing as a byproduct of its current account deficit needed to supply its currency to the rest of the world. In addition to the detriment to trade from unpredictable exchange rate fluctuations, …

Government Versus Market Regulation: The Nanny State Or The Liberal State, Warren Coats

Warren Coats

The nanny state world is characterized by a growing list of regulations and government supervision of business in an effort to fix the most recently observed problems. The price of such protection is the increased cost of doing business, which tends to crowd out small businesses and favor large ones, which can more easily absorb the compliance costs. The benefit is often difficult to detect. Has Dodd-Frank really made it feasible to fail our largest banks (now larger than they were just before the Great Recession), i.e. are they no longer too big to fail?

The self-governing, liberal state—"Liberalism unrelinquished"—is …

U.S. Monetary Policy: Qe3, Warren Coats

Warren Coats

The Federal Reserve’s latest round of quantitative easing (QE3) is not likely to help the U.S. economy’s recovery, which is already underway, but increases the risks of new asset bubbles and inflation.

Real Sdr Currency Board, Warren Coats

Warren Coats

An enhanced special drawing right (SDR), valued by a basket of goods, would provide the global currency and reserve asset the global economy craves. This paper proposes linking the value of the International Monetary Fund’s SDR and national currencies that fix their exchange rates to the SDR to a representative basket of widely traded goods. The new “real SDR” would be issued and redeemed passively according to “Currency Board” rules in exchange for financial assets with the same market value as the basket. National currencies and/or an international reserve currency with the same value (i.e. fixed to a common unit …

Central Banks And Economic Development, Warren Coats, Gary Gegenheimer

Warren Coats

South Sudan is establishing a central bank to issue and regulate a new currency, and to supervise payment systems and financial firms. The provisions of the law that establish and regulate the new central bank are critically important for how well it contributes to the economic development and well being of the new country. This note explores for discussion the key issues covered in a central bank law relating to its objectives for its currency, its independence for pursuing those objectives, and the governance structure under which it operations to maximize its commitments to those objectives.

A Global Currency For A Global Economy: Getting From Here To There, Warren Coats

Warren Coats

In this paper Dr. Warren Coats proposes stabilizing the value of money by linking it to an independently defined unit of account with a relatively constant real value. A common unit of account would lower the cost of trading by reducing transaction and information costs and would increase world trade and improve the efficiency of international resource allocation. The unit he suggests, a commodity basket, would not have the shortcomings that afflict the gold standard-gold's fluctuating relative value. The link between money and this unit that he suggests, fixing the value of a unit of money in terms of the …

Where Should We Go From Here? Inflation, Regulation, And Debt, Warren Coats

Warren Coats

A review of where the U.S. is and/or should be going over the next few years with regard to monetary policy, financial regulatory reform, and the debt bomb.

Inflations, Hyperinflations, And Will We Have One?, Warren Coats

Warren Coats

Reviews Zimbabwe's recent hyperinflation and contrast it with inflation prospects in the U.S.

The Financial Crisis: Act Ii, The Way Forward, Warren Coats

Warren Coats

Outlines how to restore financial discipline to the financial sector while avoiding inflation.

The U.S. Mortgage Market: The Good, The Bad, And The Ugly, Warren Coats

Warren Coats

An early look at the mortgage crisis in the U.S.

A Monetary Policy Framework For Sudan, Warren Coats

Warren Coats

This short overview of the money supply process and the central bank's control of the money supply is tailored to the situation of Southern Sudan, now the independent country of South Sudan.

Role Of The Central Bank Of Iraq In Implimenting Monetary Policy, Warren Coats

Warren Coats

Outlines the monetary policy regime in place in the Central Bank of Iraq and its operation following the replacement of the Baathist government in 2003

Monetary Policy Issues In Post Conflict Economies, Warren Coats

Warren Coats

Post conflict environments differ considerably depending on the factors that started and brought conflict to an end, the extent of damage to infrastructure and institutions, and the nature of post conflict governance. Many post conflict countries suffer from ethnic and/or religious divisions and animosities deepened by civil war (Bosnia and Herzegovina, Kosovo, Afghanistan, Iraq). Since the collapse of the Soviet Union, all post conflict territories that have received assistance with their reconstruction from international financial institutions have sought to establish or reestablish market based economies to varying degrees. Most had relatively highly centralized economies prior to the conflict. Thus reestablishment …

The View From The West Bank, Warren Coats

Warren Coats

Today's failure to resolve the Israeli Palestinian conflict/relationship is put in historical context.

The Bulgarian National Bank And The New Bulgaria, Warren Coats

Warren Coats

The Bulgarian National Bank (BNB) has seen many changes over its 126 years of operation. Among the most important were the “sovietisation” of the banking system in late 1947, the return to a two tier banking system in 1991, the privatization of the banks over the rest of the 1990s, the banking crisis of 1996-97 and the introduction of currency board arrangements on July 1, 1997. Each of these episodes had profound impacts on economic life in Bulgaria. As an institution, while always proud, the BNB has had its ups and downs as well. Bulgaria’s march toward a market economy …

The Early History Of The Central Bank Of Bosnia And Herzegovina, Warren Coats

Warren Coats

The CBBH opened its doors for business on August 11, 1997 with monetary liabilities of DM 132,584,030.72 million and an equal amount of foreign currency assets. Over ten months later, by the end of June 1998, the CBBH’s monetary liabilities were DM 123 million, a modest decline. By the end of 1998, however, the size of the central bank had jumped to DM 254 million, almost double its opening size. It has grown very rapidly ever since and by the end of 2002, the CBBH’s foreign currency assets stood at DM 2.5 billion—a truly astounding growth.

Central Banking In Transition: An Overview Of Main Issues Ten Years After., Warren Coats, Marko Skreb

Warren Coats

The aim of the paper is to analyze the significant changes Central and Eastern European central banks have undergone in the first decade of transition. In only a couple of years they have been completely transformed from socialist monobanking system to modern, independent central banks with the same functions as any central bank in a developed economy. Today, on average, de iure independence is very high and probably higher than the de facto one. Almost all central banks have price stability as their main mandate. Inflation was reduced significantly in the first couple of years. Monetary policy underwent crucial changes …

Institutional And Legal Impediments To Efficient Insolvent Bank Resolution And Ways To Overcome Them, Warren Coats, Arno Liuksila

Warren Coats

This paper explores the legal constraints for establishing a more efficient procedure for removing unsuccessful banks from the system. It calls for special legal techniques that treat banks differently than other companies.

Electronic Money: Developments And Issues, Warren Coats

Warren Coats

What is electronic money and what issues does its use raise for users, issuers, regulators, and monetary authorities?

Key Issues In The Reform Of Central Bank Legislation, Warren Coats, Henry Schiffman

Warren Coats

In order to improve the performance of central banks, monetary arrangements should be designed to anchor monetary policy to long-run considerations and to establish specific accountability for its implementation. In order to strengthen the long-run view needed for monetary stability against the short-run problem solving perspective more typical of governments and parliaments, there has been a growing movement in recent years in all regions of the world toward increasing central banks' independence from governments and parliaments. In all countries, the responsibility for the monetary system is ultimately the state’s. This responsibility is often explicit in a country's constitution. Central bank …

In Search Of A Monetary Anchor: A "New" Monetary Standard, Warren Coats

Warren Coats

This discussion of monetary rules generalizes "commodity" standard/currency board rules in a new way to target the CPI.

The Principles Of Tax Reform, Warren Coats

Warren Coats

Any change in tax laws benefit some and harm others, which is why "improving" the tax code is so difficult. A broad understanding and consensus on what features are fair and least distorting of the economies efficiency provides the best hope for achieving meaningful reform. These principles are not difficult to understand.