IDEAS home Printed from https://ideas.repec.org/a/oup/cambje/v42y2018i5p1315-1341..html
   My bibliography  Save this article

Financialised internationalisation and structural hierarchies: a mixed-method study of exchange rate determination in emerging economies

Author

Listed:
  • Annina Kaltenbrunner

Abstract

This paper conducts an extensive mixed-method study of exchange rate determination in the Brazilian foreign exchange market. It combines semi-structured interviews with foreign exchange market participants in Brazil and London and advanced time-series econometrics. In line with Post Keynesian theory and critical realist ontology, the interviews uncover the context-specific expectations and underlying processes and structures that condition exchange rate dynamics in Brazil and emerging economies more generally. The results point to important structural changes in Brazil’s financial integration in the form of currency internationalisation and financialisation. Moreover, they show that this internationalisation has been mediated through a structured and hierarchic international monetary system which fundamentally distinguishes exchange rate drivers in emerging economies from those in developed ones.

Suggested Citation

  • Annina Kaltenbrunner, 2018. "Financialised internationalisation and structural hierarchies: a mixed-method study of exchange rate determination in emerging economies," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 42(5), pages 1315-1341.
  • Handle: RePEc:oup:cambje:v:42:y:2018:i:5:p:1315-1341.
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1093/cje/bex081
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. John B. Davis & D. W. Hands & Uskali Mäki (ed.), 1998. "The Handbook of Economic Methodology," Books, Edward Elgar Publishing, number 741.
    2. Engle, Robert F. & Kroner, Kenneth F., 1995. "Multivariate Simultaneous Generalized ARCH," Econometric Theory, Cambridge University Press, vol. 11(1), pages 122-150, February.
    3. Frankel, Jeffrey A & Froot, Kenneth A, 1987. "Using Survey Data to Test Standard Propositions Regarding Exchange Rate Expectations," American Economic Review, American Economic Association, vol. 77(1), pages 133-153, March.
    4. Lawson, Tony, 1989. "Realism and Instrumentalism in the Development of Econometrics," Oxford Economic Papers, Oxford University Press, vol. 41(1), pages 236-258, January.
    5. Bernard Walters & David Young, 1999. "Is Critical Realism the Appropriate Basis for Post Keynesianism?," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 22(1), pages 105-123, September.
    6. Dow, Sheila, 2002. "Economic Methodology: An Inquiry," OUP Catalogue, Oxford University Press, number 9780198776123, Decembrie.
    7. Elif Karacimen, 2015. "Interlinkages between credit, debt and the labour market: evidence from Turkey," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 39(3), pages 751-767.
    8. John T. Harvey, 2001. "Exchange Rate Theory and “the Fundamentals”," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 24(1), pages 3-15, September.
    9. Therese Jefferson, 2007. "Two studies of women's retirement incomes in Australia: assessing some outcomes of pluralism in economic research," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 31(3), pages 363-378, May.
    10. Coddington, Alan, 1982. "Deficient Foresight: A Troublesome Theme in Keynesian Economics," American Economic Review, American Economic Association, vol. 72(3), pages 480-487, June.
    11. Sheila C. Dow & Victoria Chick, 2012. "The Meaning of Open Systems," Palgrave Macmillan Books, in: Foundations for New Economic Thinking, chapter 11, pages 178-196, Palgrave Macmillan.
    12. Christodoulakis, George A. & Satchell, Stephen E., 2002. "Correlated ARCH (CorrARCH): Modelling the time-varying conditional correlation between financial asset returns," European Journal of Operational Research, Elsevier, vol. 139(2), pages 351-370, June.
    13. Lawson, Tony, 1995. "The 'Lucas Critique': A Generalisation," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 19(2), pages 257-276, April.
    14. Paul Downward, 1999. "Pricing Theory in Post Keynesian Economics," Books, Edward Elgar Publishing, number 1457.
    15. Rogerio Andrade & Daniela Prates, 2013. "Exchange rate dynamics in a peripheral monetary economy," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 35(3), pages 399-416.
    16. Siobhan Austen & Therese Jefferson & Rachel Ong & Rhonda Sharp & Gill Lewin & Valerie Adams, 2016. "Recognition: applications in aged care work," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 40(4), pages 1037-1054.
    17. Silvennoinen, Annastiina & Thorp, Susan, 2013. "Financialization, crisis and commodity correlation dynamics," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 24(C), pages 42-65.
    18. Paul Davidson, 1978. "Money and the Real World," Palgrave Macmillan Books, Palgrave Macmillan, edition 0, number 978-1-349-15865-2, March.
    19. Arestis, Philip, 1996. "Post-Keynesian Economics: Towards Coherence," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 20(1), pages 111-135, January.
    20. Christopher A. Sims, 1982. "Policy Analysis with Econometric Models," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 13(1), pages 107-164.
    21. Karolyi, G Andrew, 1995. "A Multivariate GARCH Model of International Transmissions of Stock Returns and Volatility: The Case of the United States and Canada," Journal of Business & Economic Statistics, American Statistical Association, vol. 13(1), pages 11-25, January.
    22. George Argitis, 2008. "Inflation targeting and Keynes's political economy," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 31(2), pages 249-270, December.
    23. Chick, Victoria, 1995. "Is There a Case for Post Keynesian Economics?," Scottish Journal of Political Economy, Scottish Economic Society, vol. 42(1), pages 20-36, February.
    24. John Harvey, 2005. "Post Keynesian versus Neoclassical Explanations of Exchange Rate Movements: A Short Look at the Long Run," Working Papers 200501, Texas Christian University, Department of Economics.
    25. Tse, Y K & Tsui, Albert K C, 2002. "A Multivariate Generalized Autoregressive Conditional Heteroscedasticity Model with Time-Varying Correlations," Journal of Business & Economic Statistics, American Statistical Association, vol. 20(3), pages 351-362, July.
    26. Victoria Chick, 1983. "Macroeconomics after Keynes: A Reconsideration of the General Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262530457, December.
    27. Frederic S. Lee, 2002. "Theory creation and the methodological foundation of Post Keynesian economics," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 26(6), pages 789-804, November.
    28. Marc Lavoie, 2000. "A Post Keynesian View of Interest Parity Theorems," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 23(1), pages 163-179, September.
    29. Edward J. McKenna & Diane C. Zannoni, 1999. "Post Keynesian Economics and Critical Realism: A Reply to Parsons," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 22(1), pages 57-70, September.
    30. Tony Lawson, 1994. "The Nature of Post Keynesianism and Its Links to Other Traditions: A Realist Perspective," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 16(4), pages 503-538, July.
    31. Lawson, Tony, 1985. "Uncertainty and Economic Analysis," Economic Journal, Royal Economic Society, vol. 95(380), pages 909-927, December.
    32. Sheila C. Dow, 2011. "Cognition, market sentiment and financial instability," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 35(2), pages 233-249.
    33. Paul Davidson, 2002. "Financial Markets, Money and the Real World," Books, Edward Elgar Publishing, number 2467.
    34. Paul Downward & Andrew Mearman, 2007. "Retroduction as mixed-methods triangulation in economic research: reorienting economics into social science," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 31(1), pages 77-99, January.
    35. Downward, Paul, 2000. "A Realist Appraisal of Post-Keynesian Pricing Theory," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 24(2), pages 211-224, March.
    36. Paul Downward & John H. Finch & John Ramsay, 2002. "Critical realism, empirical methods and inference: a critical discussion," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 26(4), pages 481-500, July.
    37. Philip Arestis, 1992. "The Post-Keynesian Approach to Economics," Books, Edward Elgar Publishing, number 16.
    38. Annina Kaltenbrunner & Juan Pablo Painceira, 2015. "Developing countries’ changing nature of financial integration and new forms of external vulnerability: the Brazilian experience," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 39(5), pages 1281-1306.
    39. R. L. Hall & C. J. Hitch, 1939. "Price Theory And Business Behaviour," Oxford Economic Papers, Oxford University Press, vol. 0(1), pages 12-45.
    40. Annina Kaltenbrunner, 2015. "A post Keynesian framework of exchange rate determination: a Minskyan approach," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 38(3), pages 426-448, October.
    41. Marc Lavoie, 1992. "Foundations of Post-Keynesian Economic Analysis," Books, Edward Elgar Publishing, number 275.
    42. Markus K. Brunnermeier & Stefan Nagel & Lasse H. Pedersen, 2009. "Carry Trades and Currency Crashes," NBER Chapters, in: NBER Macroeconomics Annual 2008, Volume 23, pages 313-347, National Bureau of Economic Research, Inc.
    43. Roy J. Rotheim, 1999. "Post Keynesian Economics and Realist Philosophy," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 22(1), pages 71-103, September.
    44. Andrew Mearman, 2004. "'Open-Systems' and Economic Methodology," Working Papers 0402, Department of Accounting, Economics and Finance, Bristol Business School, University of the West of England, Bristol.
    45. Tony Lawson, 1994. "The Nature of Post Keynesianism and Its Links to Other Traditions," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 17(1), pages 164-164, September.
    46. John T. Harvey, 1991. "A Post Keynesian View of Exchange Rate Determination," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 14(1), pages 61-71, September.
    47. Philip Arestis & Stephen P. Dunn & Malcolm Sawyer, 1999. "Post Keynesian Economics and Its Critics," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 21(4), pages 527-549, July.
    48. J. M. Keynes, 1997. "The General Theory of Employment," Voprosy Ekonomiki, NP Voprosy Ekonomiki, vol. 5.
    49. Paul Downward & Andrew Mearman, 2002. "Critical Realism and Econometrics: Constructive Dialogue with Post Keynesian Economics," Metroeconomica, Wiley Blackwell, vol. 53(4), pages 391-415, November.
    50. Sheila C. Dow, 1996. "The Methodology of Macroeconomic Thought," Books, Edward Elgar Publishing, number 933.
    51. Cheung, Yin-Wong & Chinn, Menzie David, 2001. "Currency traders and exchange rate dynamics: a survey of the US market," Journal of International Money and Finance, Elsevier, vol. 20(4), pages 439-471, August.
    52. Jan Toporowski & Jo Michell (ed.), 2012. "Handbook of Critical Issues in Finance," Books, Edward Elgar Publishing, number 14083.
    53. Andrea Terzi, 2005. "International Financial Instability in a World of Currencies Hierarchy," DISCE - Quaderni dell'Istituto di Economia e Finanza ief0064, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    54. John T. Harvey, 1998. "The Nature of Expectations in the Foreign Exchange Market: A Test of Competing Theories," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 21(2), pages 181-200, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Giuliano Toshiro Yajima, 2021. "The Employer of Last Resort Scheme and the Energy Transition: A Stock-Flow Consistent Analysis," Economics Working Paper Archive wp_995, Levy Economics Institute.
    2. Alves, Carolina & Kvangraven, Ingrid Harvold, 2020. "Changing the Narrative: Economics After Covid-19," Review of Agrarian Studies, Foundation for Agrarian Studies, vol. 10(1), July.
    3. José Luis Oreiro & Carmem Aparecida Feijó & Lionelo Franco Punzo & João Pedro Heringer Machado, 2021. "Peripherical Financialization and Premature Deindustrialization: A Theory and the Case of Brazil (2003-2015)," Working Papers PKWP2027, Post Keynesian Economics Society (PKES).
    4. Guillermo Benavides-Perales & Isela-Elizabeth Téllez-León & Francisco Venegas-Martínez, 2020. "How Sensitive is the Exchange Rate to External and Internal Factors in Mexico? A Comparative Analysis with 27 Developed and Emerging Economies," Revista de Investigación en Ciencias Contables y Administrativas, Universidad Michoacana de San Nicolás de Hidalgo, Facultad de Contaduría y Ciencias Administrativas, vol. 6(1), pages 4-18, December.
    5. José Luis Oreiro & Carmem Aparecida Feijó & Lionelo Franco Punzo & João Pedro Heringer Machado, 2021. "Peripherical Financialization and Premature Deindustrialization: A Theory and the Case of Brazil (2003-2015)," Working Papers PKWP2103, Post Keynesian Economics Society (PKES).
    6. Koddenbrock, Kai & Sylla, Ndongo Samba, 2019. "Towards a political economy of monetary dependency: The case of the CFA franc in West Africa," MaxPo Discussion Paper Series 19/2, Max Planck Sciences Po Center on Coping with Instability in Market Societies (MaxPo).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Fontana, Giuseppe & Gerrard, Bill, 2004. "A Post Keynesian theory of decision making under uncertainty," Journal of Economic Psychology, Elsevier, vol. 25(5), pages 619-637, October.
    2. Andrew Mearman, 2006. "Critical realism in economics and open-systems ontology: A critique," Review of Social Economy, Taylor & Francis Journals, vol. 64(1), pages 47-75.
    3. Giuseppe Fontana & Bill Gerrard, 2006. "The future of Post Keynesian economics," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 59(236), pages 49-80.
    4. Eduardo Fernández-Huerga & Ana Pardo & Ana Salvador, 2023. "Compatibility and complementarity between institutional and post-Keynesian economics: a literature review with a particular focus on methodology," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 40(2), pages 413-443, July.
    5. Lee, Frederic, 2012. "Critical realism, grounded theory, and theory construction in heterodox economics," MPRA Paper 40341, University Library of Munich, Germany.
    6. Siobhan Austen & Therese Jefferson, 2006. "Comparing responses to critical realism," Journal of Economic Methodology, Taylor & Francis Journals, vol. 13(2), pages 257-282.
    7. Finn Olesen, 2010. "Uncertainty, bounded rationality and post-Keynesian Macroeconomics," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 7(1), pages 109-124.
    8. Finn Olesen, 2007. "Kritisk realisme og post keynesianisme," Working Papers 75/07, University of Southern Denmark, Department of Sociology, Environmental and Business Economics.
    9. Bonizzi, Bruno & Kaltenbrunner, Annina & Powell, Jeffrey, 2019. "Subordinate financialization in emerging capitalist economies," Greenwich Papers in Political Economy 23044, University of Greenwich, Greenwich Political Economy Research Centre.
    10. Dr Paul Downward, "undated". "Realism and Inference in Economics: A Note," Working Papers 98-7, Staffordshire University, Business School.
    11. Downward, Paul, 2004. "Post Keynesian pricing theory: Alternative foundations and prospects for future research," Journal of Economic Psychology, Elsevier, vol. 25(5), pages 661-670, October.
    12. David Dequech, 2008. "Varieties of uncertainty: a survey of the economic literature," Anais do XXXVI Encontro Nacional de Economia [Proceedings of the 36th Brazilian Economics Meeting] 200807211223070, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    13. Victoria Chick, 2013. "The future is open: on open-system theorising in economics," Chapters, in: Jesper Jespersen & Mogens Ove Madsen (ed.), Teaching Post Keynesian Economics, chapter 3, pages 56-72, Edward Elgar Publishing.
    14. Eckhard Hein, 2017. "Post-Keynesian macroeconomics since the mid 1990s: main developments," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 14(2), pages 131-172, September.
    15. Paul Downward, "undated". "Risk, Uncertainty and Inference in Post Keynesian Economics:A Realist Commentary," Working Papers 98-8, Staffordshire University, Business School.
    16. Paul Downward & Frederick Lee, "undated". "Post Keynesian Pricing Theory `Reconfirmed'(?) A Critical Review of `Asking About Prices'," Working Papers 98-13, Staffordshire University, Business School.
    17. Murray, Michael/ M J, 2011. "A critical perspective on heterodox production modeling," MPRA Paper 34255, University Library of Munich, Germany.
    18. Lee, Frederic, 2011. "The making of heterodox microeconomics," MPRA Paper 30907, University Library of Munich, Germany.
    19. Guizzo, Danielle & Strachman, Eduardo & Dalto, Fabiano & Feijo, Carmem, 2018. "Financialisation and Development: how can emerging economies catch up?," MPRA Paper 87076, University Library of Munich, Germany.
    20. Kenneth P. Jameson, 2004. "Dollarization in Ecuador: A Post-Keynesian Analysis," Working Paper Series, Department of Economics, University of Utah 2004_05, University of Utah, Department of Economics.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:cambje:v:42:y:2018:i:5:p:1315-1341.. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oxford University Press (email available below). General contact details of provider: https://academic.oup.com/cje .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.