Measuring Currency Mismatch and Aggregate Effective Currency Mismatch

Morris Goldstein and Philip Turner

Chapter 12 in Trade, Currencies, and Finance, 2017, pp 437-482 from World Scientific Publishing Co. Pte. Ltd.

Abstract: A currency mismatch refers to how a change in the exchange rate will affect the present discounted value of future income and expenditure flows. This will depend on two broad elements. One is the currency denomination of financial assets and liabilities: the more sensitive the net financial worth to changes in the exchange rate, the greater, ceteris paribus, the currency mismatch. The other is the currency denomination of future income and expenditure flows (other than returns to capital assets). Once such a broad perspective is adopted, significant differences in the degree of currency mismatch are revealed both across emerging economies and over time.

Keywords: Trade; Currencies; Finance; IMF; Financial Regulation; Trade Elasticities; China (search for similar items in EconPapers)
Date: 2017
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