The Euro : a seafarer on Tides of 'Stateless' money?
By: MARTHINSEN, John
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Contributor(s): EDMUNDS, John.
Material type: 
ArticlePublisher: 2000European Management Journal 18, 1, p. 106-112Abstract: Using an Excel simulation model, John Marthinsen and John Edmunds demonstrate how portfolio investment flowing form one currency zone to another can easily cause the value of the euro to spiral away form its 'correct' value. The authors simulated trajectories for exchange rates among the euro, they yen and the US dollar. They found repeatedly that in a short span of days, the market valuations of an entire region's capital stock can drop more than 20 per cent or rise more than 40 per cent. The result shows that the euro displays longer swings, with wider amplitude, than the 11 European currencies would have done if they had not been unified. This provocative result has major implicaitons for the capital stock of the European Union, and shows how important it is for economic policymakers to manage investor expectations beyond the usual policy measures. Ti is particularly important in the European Union where the euro appears, to judge by this research, to magnify the appears, to judge by this research , to magnify the swings caused by international flows of portfolio investment
| Item type | Current location | Collection | Call number | Status | Date due | Barcode |
|---|---|---|---|---|---|---|
| Periódico | Biblioteca Graciliano Ramos | Periódico | Not for loan |
Using an Excel simulation model, John Marthinsen and John Edmunds demonstrate how portfolio investment flowing form one currency zone to another can easily cause the value of the euro to spiral away form its 'correct' value. The authors simulated trajectories for exchange rates among the euro, they yen and the US dollar. They found repeatedly that in a short span of days, the market valuations of an entire region's capital stock can drop more than 20 per cent or rise more than 40 per cent. The result shows that the euro displays longer swings, with wider amplitude, than the 11 European currencies would have done if they had not been unified. This provocative result has major implicaitons for the capital stock of the European Union, and shows how important it is for economic policymakers to manage investor expectations beyond the usual policy measures. Ti is particularly important in the European Union where the euro appears, to judge by this research, to magnify the appears, to judge by this research , to magnify the swings caused by international flows of portfolio investment
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