Essays in international economics
For a small open economy: Redux and distribution costs . The paper explores the role played by distribution costs in the behavior of exchange rates in a model with imperfect competition and sticky prices. Theoretically, the introduction of distribution costs yields higher overshooting of the short-run nominal exchange rate than the one observed in a model without them, when a monetary shock occurs. Moreover, in the short run, the nominal depreciation is higher than the real one. Empirical analysis for Chile and Thailand suggest that the predicted behavior of exchange rates under the model with distribution costs is closer to what is observed in the data. Foreign banks and domestic banking systems . The paper explores the effects of foreign banks presence in domestic systems. Theoretically, we present a model in which local and foreign banks simultaneously decide whether or not to undertake efficiency-enhancing efforts in order to expand their businesses. In equilibrium foreign presence induces local banks to improve their efficiency levels even when the market is already relatively efficient and competitive. This effect can be reduced when foreign banks have disadvantages in terms of information. Empirically, the paper reviews the recent experience of a panel of 103 countries. The main result suggests that foreign banks may boost banking efficiency, without necessarily increasing banking fragility. 'Country X Incorporated': An alternative approach to currency crises prediction . The paper proposes a parsimonious methodology to predict currency crises. We suggest: to evaluate a country like a corporation, assessing ratios of solvency, liquidity, and competitiveness. Our claim is that this insight of treating a country as a corporation (or devaluation as a default) allows the researcher to make a better and more parsimonious transition from theoretical models to the empirical tests. Some results show that the performance is quite good.
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|Authors:||Gasha, Jose Giancarlo|
|Type of publication:||Other|
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