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PPP Strikes Back: Aggregation and the Real Exchange Rate

Imbs, Jean; Mumtaz, Haroon; Ravn, Morten O; Rey, Hélène - C.E.P.R. Discussion Papers - 2003

We show the importance of a dynamic aggregation bias in accounting for the PPP puzzle. We prove that established time-series and panel methods substantially exaggerate the persistence of real exchange rates because of heterogeneity in the dynamics of disaggregated relative prices. When...

Persistent link: https://www.econbiz.de/10005497901

Sovereign Risk, Credibility and the Gold Standard: 1870-1913 versus 1925-31

Obstfeld, Maurice; Taylor, Alan M. - C.E.P.R. Discussion Papers - 2003

What determines sovereign risk? We study the London bond market from the 1870s to the 1930s. Our findings support conventional wisdom concerning the limited credibility of the interwar gold standard. Before 1914, gold standard adherence effectively signalled credibility and shaved 40 to 60 basis...

Persistent link: https://www.econbiz.de/10005497898

The Geography of Asset Trade and the Euro: Insiders and Outsiders

Coeurdacier, Nicolas; Martin, Philippe - C.E.P.R. Discussion Papers - 2007

This paper analyzes the determinants of cross-border asset trade on cross-country data and a Swedish data set. We focus our analysis on the effect of the euro for the determinants of bond trade, equity and banking assets. With the help of a theoretical model, we attempt to disentangle the...

Persistent link: https://www.econbiz.de/10005497990

Is Europe an Optimum Currency Area?

Bofinger, Peter - C.E.P.R. Discussion Papers - 1994

The debate on EMU has been very influenced by the traditional theory of optimum currency areas (OCAs). The paper shows … that this theory is not an ideal yardstick for an assessment of EMU. Its assumptions are not very realistic and its focus … currency areas. Because of these shortcomings the paper develops a monetary approach to the theory of OCAs. In this concept the …

Persistent link: https://www.econbiz.de/10005498125

Was the Classical Gold Standard Credible on the Periphery? Evidence from Currency Risk

Mitchener, Kris; Weidenmier, Marc - C.E.P.R. Discussion Papers - 2015

exchange rates during the classical gold standard era. Theory suggests that a completely credible and permanent commitment to …

Persistent link: https://www.econbiz.de/10011165661

Assessing International Efficiency

Heathcote, Jonathan; Perri, Fabrizio - C.E.P.R. Discussion Papers - 2013

This paper is structured in three parts. The first part outlines the methodological steps, involving both theoretical and empirical work, for assessing whether an observed allocation of resources across countries is efficient. The second part applies the methodology to the long-run allocation of...

Persistent link: https://www.econbiz.de/10011083981

Exchange Rates Dynamics with Long-Run Risk and Recursive Preferences

Kollmann, Robert - C.E.P.R. Discussion Papers - 2014

Standard macro models cannot explain why real exchange rates are volatile and disconnected from macro aggregates. Recent research argues that models with persistent growth rate shocks and recursive preferences can solve that puzzle. I show that this result is highly sensitive to the structure of...

Persistent link: https://www.econbiz.de/10011084256

Macroprudential Policies in a Global Perspective

Jeanne, Olivier - C.E.P.R. Discussion Papers - 2014

This paper analyzes the case for the international coordination of macroprudential policies in the context of a simple theoretical framework. Both domestic macroprudential policies and prudential capital controls have international spillovers through their impact on capital flows. The...

Persistent link: https://www.econbiz.de/10011084357

Sovereign Debt Markets in Turbulent Times: Creditor Discrimination and Crowding-Out Effects

Broner, Fernando A; Erce, Aitor; Martin, Alberto; … - C.E.P.R. Discussion Papers - 2013

In 2007, countries in the euro periphery were enjoying stable growth, low deficits, and low spreads. Then the Financial crisis erupted and pushed them into deep recessions, raising their deficits and debt levels. By 2010, they were facing severe debt problems. Spreads increased and,...

Persistent link: https://www.econbiz.de/10011084507

The Financial Resource Curse

Benigno, Gianluca; Fornaro, Luca - C.E.P.R. Discussion Papers - 2013

This paper presents a model of financial resource curse, i.e. episodes of abundant access to foreign capital coupled with weak productivity growth. We study a two-sector, tradable and non-tradable, small open economy. The tradable sector is the engine of growth, and productivity growth is...

Persistent link: https://www.econbiz.de/10011084525