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As the usineiros wade their way through the free market, many of the 120 sugar-producing countries around the world that cannot effectively subsidize or shield their sugar industries from foreign shocks are increasingly concerned about the changes in Brazil.
This "balkanisation" of finance may well lead to a financial system that is more resilient to foreign shocks, but less diversified and therefore riskier.Diversified banks with operations around the world are generally able to offset losses in one country with profits from another.
Unlike other estimated small-open-economy DSGE models, we find that more than one third of the domestic GDP growth is driven by foreign shocks.
The elevated contribution of foreign shocks to the domestic economy is driven by our decision to exclude mapping export demand to data on world GDP.
This feature makes exports and, consequently, domestic GDP much more sensitive to variations to foreign demand and raises the importance of foreign shocks to the domestic business cycle.
Susceptibility to foreign shocks would be an adequate phrase to describe the Colombian peso's behavior against the U.S. dollar over the past months.
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On the one hand, exchange rate volatility contributes to a large part of the import price inflation variation of the Euro-area in contrast to foreign markup shocks.
On the other, the share of foreign-currency debt has expanded, which in turn means greater exposure to foreign currency shocks.
That same month the public stabbing of Anna Lindh, the popular minister of foreign affairs, shocked Swedes and again raised questions about the price of an open and egalitarian society.
She acquires a foreign electric shock weapon to stun the dog; buys marijuana from the bottled water supplier, blowing the smoke into her vacuum cleaner; uses her vibrating electric washer as an aid to masturbation; and hires a stern Chinese woman to teach her pre-teen children Mandarin.
Well, as the Nobel laureate economist Paul Krugman was at pains to demonstrate in a recent paper, an economy with flexible exchange rates and debt denominated in domestic currency will expand, not contract, in response to a foreign deleveraging shock.
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