268 research outputs found
When EU corporate bond spreads widen, recession may be around the corner
No full textWider spreads reduce GDP growth by a larger amount in the peripheral economies, write Michael Bleaney, Paul Mizen and Veronica Velean
Exchange Rate Regimes and Inflation Persistence
No full textSome empirical research has suggested that inflation is more persistent under floating exchange rates. Theoretically, we should expect a higher variance of inflation persistence across countries under floating rates, but not necessarily a higher mean. It is shown that estimates of inflation persistence are biased upwards by underfitting mean shifts in the sample. After correction for mean shifts, there is evidence of greater inflation persistence in the post-Bretton Woods period, but no evidence of variation across exchange rate regimes. Monetary growth has been much less accommodative of inflation since 1979, with no difference between EMS and non-EMS countries. Copyright 2001, International Monetary Fund
Exchange Rate Regimes and Monetary Discipline - Only Hard Pegs Make a Difference
No full textPrevious research has suggested that pegged exchange rates are associated with lower inflation than floating rates. In which direction does the causality run? Using data from a large sample of developing countries from 1984 to 2000, we confirm that "hard" pegs (currency boards or a shared currency) reduce inflation and money growth. There is no evidence that "soft" pegs confer any monetary discipline. The choice between soft pegs and floats is determined by inflation: when inflation is low, pegs tend to be chosen and sustained, and when inflation is high, either floats are chosen or there are frequent regime switches.
The Regional Impact of Trade Liberalization in a Model with Congestion Costs a la Helpman
No full textMoncarz P. E. and Bleaney M. The regional impact of trade liberalization in a model with congestion costs a la Helpman, Regional Studies. The effects of the liberalization of international trade are analysed in a New Economic Geography model of a country with an asymmetrical distribution of housing between regions. Labour is mobile between regions, but not between countries. Trade liberalization tends to reduce inequalities in the distribution of the population between the two regions, although the population is more unequally distributed than housing. Results are similar when there is a bias in preferences towards home-produced varieties of manufactures. If consumers care relatively little about housing and transport costs are high enough, an agglomerated equilibrium becomes stable. [image omitted] Moncarz P. E. et Bleaney M. Une analyse de l'impact regional de la liberalisation des echanges a partir d'un modele comportant des couts d'encombrement a la Helpman, Regional Studies. A partir d'un modele du type Nouvelle Geographie Economique d'un pays a une distribution interregionale du logement asymetrique, on analyse l'impact de la liberalisation des echanges. La main-d'oeuvre est mobile sur le plan interregional mais ne l'est pas au niveau international. La liberalisation des echanges a tendance a reduire les inegalites de la distribution de la population entre deux regions, bien que la population soit distribuee de maniere plus inegale que ne le soit le logement. Les resultats s'averent similaires quand il y a une tendance en faveur des fabrications locales. Si les consommateurs s'interessent relativement peu au logement et que les frais de transport soient suffisamment eleves, un equilibre agglomere devient stable. Liberalisation des echanges Agglomeration Frais de logement Moncarz P. E. und Bleaney M. Die regionale Auswirkung einer Handelsliberalisierung in einem Modell mit Verkehrsmittelnutzungskosten a la Helpman, Regional Studies. Anhand eines Modells der neuen Wirtschaftsgeografie analysieren wir in einem Land mit innerhalb der Regionen asymmetrisch verteiltem Wohnungsangebot die Auswirkungen der Liberalisierung des internationalen Handels. Arbeitskrafte sind auf interregionaler, nicht jedoch auf internationaler Ebene mobil. Eine Liberalisierung des Handels baut tendenziell Ungleichgewichte bei der Verteilung der Bevolkerung auf zwei Regionen ab, wobei allerdings die Bevolkerung ungleichmassiger verteilt ist als das Wohnungsangebot. Die Ergebnisse fallen ahnlich aus, wenn die Praferenz einseitig zugunsten einheimisch produzierter Arten von Erzeugnissen tendiert. Wenn die Verbraucher auf das Wohnungsangebot relativ wenig Wert legen und die Verkehrsmittelnutzungskosten hoch genug liegen, erhalt ein agglomeriertes Gleichgewicht Stabilitat. Handelsliberalisierung Agglomeration Wohnungskosten Moncarz P. E. y Bleaney M. Impactos regionales de la liberalizacion comercial en un modelo con costos de congestion a la Helpman, Regional Studies. Los efectos de la liberalizacion comercial son analizados usando un modelo de la Nueva Geografia Economica, suponiendo una economia con una distribucion asimetrica entre regiones del stock de vivienda. El factor trabajo es movil entre regiones pero no entre paises. La liberalizacion comercial tiende a reducir la desigualdad en la distribucion de la poblacion entre las regiones, aunque esta se distribuye de forma mas desigual que el stock de vivienda. Resultados similares emergen cuando se permite la presencia de un sesgo en las preferencias por los bienes producidos domesticamente. Si los consumidores no se preocupan lo suficiente por el consumo de servicios de vivienda, y los costos de transporte son elevados, un equilibrio con la poblacion concentrandose en una sola region se vuelve estable. Liberalizacion comercial Aglomeracion y costos de viviendaTrade liberalization, Agglomeration, Housing costs,
What Makes Currencies Volatile? An Empirical Investigation
No full textReal effective exchange rate volatility is examined for 90 countries using monthly data from January 1990 to June 2006. Volatility decreases with openness to international trade and per capita GDP, and increases with inflation, particularly under a horizontal peg or band, and with terms - of - trade volatility. The choice of exchange rate regime matters. After controlling for these effects, and independent float adds at least 45% to the standard deviation of the real effective exchange rate, relative to a conventional peg, but must other regimes make little difference. The results are robust to alternative volatility measures and to sample selection bias.Exchange rate regimes; Inflation; Volatility
FUNDAMENTALS AND EXCHANGE RATE VOLATILITY
No full textFundamentals may determine the range of real exchange rate fluctuation, through signals of misalignment, even if they are not a major influence on the level within that range. This can explain the puzzle that more open economies experience lower real exchange rate volatility. Adjustment of domestic prices to nominal exchange rate movements can account for only a small proportion of this effect. Sustainability analysis focuses on the ratio of the current account to GDP (rather than to total trade flows) as a misalignment signal, which implies narrower bounds for real exchange rates in more open economies.
Currency Networks, Bilateral Exchange Rate Volatility and the Role of the US Dollar
No full textWe investigate monthly bilateral exchange rate volatility for a large sample of currency pairs over the period 1999-2006. Pegs (particularly to the US dollar) and managed floats tend to have lower volatility than independent floats. A deeper investigation shows that the peg effect operates almost entirely through currency networks (i.e. where two currencies are pegged to the same anchor currency), and the lower volatility of US dollar pegs reflects the size of the US dollar network. Managed floats show clear evidence of tracking the US dollar, further increasing the effective size of the US dollar network. Inflation undermines the currency-stabilizing effect of peg networks. Currencies in smaller peg networks have higher unweighted but not trade-weighted exchange rate volatility, which is consistent with anchors being chosen to minimize trade-weighted volatility. The size of the effective US dollar network revealed here is a plausible explanation of the rarity of basket pegs. Volatility also reflects a range of structural factors such as country size, level of development, population density, inflation differentials and business cycle asymmetry.exchange rate volatility; currency peg; inflation
What Makes Currencies Volatile? An Empirical Investigation
No full textReal effective exchange rate volatility is examined for 90 countries using monthly data from January 1990 to June 2006. Volatility decreases with openness to international trade and per capita GDP, and increases with inflation, particularly under a horizontal peg or band, and with terms-of-trade volatility. The choice of exchange rate regime matters. After controlling for these effects, a free float adds at least 45 % to the standard deviation of the real effective exchange rate, relative to a conventional peg, but most other regimes make little difference. The results are robust to alternative volatility measures and to sample selection bias.Exchange rate regimes, inflation, volatility
Inflation Persistence and Exchange Rate Regimes: Evidence from Developing Countries
No full textUsing data for 102 developing countries, it is shown that inflation persistence is particularly high in countries with severe inflationary problems, and particularly low in countries on hard pegs. Inflation persistence is similar under floating and soft pegs.Inflation, persistence, exchange rates
International labour mobility and unemployment
No full textWe develop a two-country labour-market model characterised by union wage-bargaining, in which the unemployed incur individual-specific costs of seeking work abroad. We explore the effects on equilibrium unemployment in each country of changes in union bargaining strength, the ratio of unemployment benefits to wages, and employers' willingness to hire foreign workers. Unfavourable labour-market institutions increase unemployment abroad as well as at home. We find that no country has an incentive to internationalise its own labour market unilaterally, because all the employment gains spill over abroad, which gives countries a strong incentive to co-ordinate on internationalisation.international labour mobility, unions, wage bargaining, globalization, unemployment
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