¡@¡@Taiwan lacks of natural resources and highly industrialized at the same time. International trade activities are the most crucial way to obtain raw materials for production and channels to sell Taiwan¡¦s output to the rest of the world. Therefore, the fluctuation of real exchange rate influences exports and imports just as double blades sword, and subtly causes welfare issue. In this paper, we combine traditional productivity argument proposed by Balassa-Samuelson and recent literatures focusing on sticky price both to cause real exchange rate in the long-run using Taiwan as a case. Using structural VAR model to decompose unobservable shocks, change in productivity between domestic economy and the trading blocs is still the most influencing factor to explain the fluctuation of real exchange rate of Taiwan.

Regulators only require banks to manage their short-term exchange rate risk stringently. A possible reason is that the prevailing capital-market methodology cannot determine the long-term exchange rate risk. Using the real performance of operating incomes, this paper investigates the impact of fluctuating foreign currencies on the values of Taiwanese banking institutions, and decomposes the overall exchange rate risk into short-term and long-term components. We not only overcome the deficiency of prior studies that have limited success in detecting significant currency exposure, but also measure correct economic exposure that firms are confronted with. Comparing with the capital market approach, we find the evidence of the relative strength of cash flows to detect currency exposure. After controlling for the impact of interest rates, we find that, over the time period examined, 61.54% of the sample firms have a significant currency exposure, which is larger than those documented by prior research. Our result also shows that the existence of significant long-term exchange rate risk is prevalent among Taiwanese banking institutions. Furthermore, US dollar (the currency of a nation which is Taiwan¡¦s largest exporting country) has an opposite effect as opposed to Japanese Yen (the currency of a nation which is Taiwan¡¦s largest importing partner). Our results have policy implications that banking institutions should manage long-term currency exposure.

Abstract There are gradually prosperous trades in foreign exchange markets, agents could hedge, speculate and arbitrage in markets. Market efficiency therefore is worthy of investigate in international finance. There are a lot of empirical studies examine whether the long-run relationship would exist between spot exchange rate and forward exchange rate in conventional linear models. However the conclusions were not similar. Sarno and Chowdhury¡]2003¡^mentioned that linear models imply residuals of model adjust to equilibrium by fixed speed. If dynamic adjustment of nonlinear model exists, linear model is hard to capture the dynamic adjustment. Ender¡]1995¡^also mentioned that cointegration has long run linear relationship in variables. Theoretically, nonlinear relationship may exist. Furthermore, some literatures demonstrate how transaction cost and technical analysis induce nonlinear adjustment of the deviation for equilibrium exchange rate. We consider a new approach that Tersävirta and Anderson¡]1992¡^provided the Smooth Transition Autoregressive Model¡]STAR¡^, to re-examine the long-run relationship between spot exchange rate and forward exchange rate. According to the empirical results, we can find that all variables can be modeled by nonlinear models. The results of relationships exist between spot and forward exchange rates in France, Germany, Canada, Japan, Norway, Spain, Australia, Ireland, Italy, .Austria, Belgium, Denmark, Luxembourg, the Netherlands, Sweden, Switzerland, Greece and New Zealand, but it doesn¡¦t exist in the United Kingdom and Finland.

Using asset prices to explain the fluctuations of nominal exchange rate is popular for decades. A majority of papers focused on Monetary Model but failed to make a consistent conclusion. In this article, we suggest that the failure of monetary model might be coming from the basic assumption of taking different countries¡¦ assets as ¡§perfect substitutes¡¨. Under such circumstances, we introduce another model named as ¡§Portfolio Balance Model¡¨ where assets of different countries are no longer be taken as ¡§perfect substitutes¡¨ , implying that UIP( Uncoverd Interest Rate Parity)exist no more either. We do not overthrow the entire theory of Monetary Model. Instead, we expect the combination of these two models will turn something out that can be much more general, consistent, and robust. We take Canada as our domestic currency and adopt Johansen(1988) and Stock & Walson(1988) by using co-integration to test on three exchange rates relation (USD/CAD,GBP/CAD,JPY/CAD) from 1973 Q1 to 2004 Q4. It turns out that most of the coefficient are correct and passing statistical significance, such result suggest that the portfolio balance effect should not be ignored in the model.

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Because CFC-11 and CFC-12 are extremely stable and purely anthropogenic and the CFCs enter the ocean through air-sea exchange at the sea surface, they serve as good tracers for studying the oceans. Since CFCs and tritium share similar characteristics such as their anthropogenic production, inertness to biological activities, a tritium box model applied to the North Atlantic Ocean by J. L. Sarmiento in 1983 is used to study the distribution of CFCs in the Northwest Pacific. This thesis attempts to use this model to calculate the past concentrations of CFCs in the atmosphere assuming equilibrium distribution between the surface ocean waters and the atmosphere in the source region of the oceans. The results may allow us to check the history of CFCs in the atmosphere. The data used in this thesis are those reported by NOAA from three cruises: CO2-87 and CGC92 along 165oE and CO2-88 along 170oW, all from 40o to 10oN. This latitude range avoids the complex gyres and the sea-ice which may limit the air-sea exchange in the North, and also avoids the upwelling in the equatorial region. The outcrop of the 26.0 sq water is located at longitude about 52o-53oN along 165oE, but is located at about 40oN along 170oW. The outcrop will move southward in winter. The vertical distribution pattern of CFCs is similar to that of oxygen. Concentrations of CFCs in ocean water increase as potential temperature and salinity decrease. High latitudes of low temperature and salinity have high CFC solubility and high air-sea exchange rates, and are presumably the major areas for input of CFCs into the seawater. As the CFCs in the air increase over the years the concentrations of CFCs in the surface ocean water also increase but decrease with water depth. The solubility, F, of CFCs is a function of both temperature and salinity, but temperature prevails. The F values for CFC-11 and CFC-12 from 10o to 50oN along 165oE are 5.86-16.0 and 1.70-4.15 mmole/kg/ atm, respectively. The values along 170oW are, respectively, 6.60-22.2 and 1.89-5.55 mmole/kg/atm. The solubility of CFC-11 is about four times as large as that of CFC-12. The solubility of CFCs along 170oW is about 1.4 times along 165oE because of temperature and salinity differences. The exchange rate in the time scale for =1 year ranges 0.85-1.3 yr-1, CFC-11 has a mean of 0.99 yr-1, CFC-12 has a mean of about 1.04 yr-1. Along the isopycnal surface of sq=26.0, the highest exchange rate between two boxes is 2.34 yr-1, the lowest 0.06 yr-1. Based on the calculated concentrations of CFCs in the surface seawater from the atmospheric value in the past, apparent ages of the Mode Waters are similar for both CFC-11 and CFC-12. The apparent age along 165oE at 10oN is about 17 years on the defined isocypnal surface, and it is about 15 years along 170oW at 10oN. The spreading rate of CFCs in the Northwest Pacific is thus about 172-221 km/yr. During the 17 years, the annual increase in influx to the seawater is about 0.12 pM/kg/yr for CFC-11, and about 0.059 pM/kg/yr for CFC-12. The error in calculating atmosphere CFCs in the past is about 11 % for CFC-11, and 6 % for CFC-12.

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Foreign aid has shaped the economies of Sub-Saharan Africa since independence. There has been passionate debate as to whether this has helped or hurt Africa’s poor economies. One of the downsides to foreign aid is the effect it can have on appreciating the real exchange rate and on harming the competitiveness of export-oriented sectors in favour of producers of non-traded goods. I find that the influence of aid flows on the real exchange rate varies greatly across countries, and that movements in the real exchange rate driven by foreign aid have been overshadowed by policy changes and structural adjustment.