Covered Interest Parity Deviations : Macrofinancial Determinants /

For about three decades until the Global Financial Crisis (GFC), Covered Interest Parity (CIP) appeared to hold quite closely-even as a broad macroeconomic relationship applying to daily or weekly data. Not only have CIP deviations significantly increased since the GFC, but potential macrofinancial...

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Bibliographic Details
Main Author: Cerutti, Eugenio
Other Authors: Obstfeld, Maurice, Zhou, Haonan
Format: Journal
Language:English
Published: Washington, D.C. : International Monetary Fund, 2019.
Series:IMF Working Papers; Working Paper ; No. 2019/014
Online Access:Full text available on IMF
Description
Summary:For about three decades until the Global Financial Crisis (GFC), Covered Interest Parity (CIP) appeared to hold quite closely-even as a broad macroeconomic relationship applying to daily or weekly data. Not only have CIP deviations significantly increased since the GFC, but potential macrofinancial drivers of the variation in CIP deviations have also become significant. The variation in CIP deviations seems to be associated with multiple factors, not only regulatory changes. Most of these do not display a uniform importance across currency pairs and time, and some are associated with possible temporary considerations (such as asynchronous monetary policy cycles).
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Physical Description:1 online resource (36 pages)
Format:Mode of access: Internet
ISSN:1018-5941
Access:Electronic access restricted to authorized BRAC University faculty, staff and students