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The Variation of Gravity within Countries (or 15 Reasons Why Gravity Should Be Estimated with Domestic Trade Flows)

Yotov, Yoto - 2021

foundations and clear gains from theory-consistent policy analysis, there are still gaps between gravity theory and empirics. This … paper focuses on domestic trade flows, and I argue that there are significant benefits from adhering to theory by estimating … survey of the literature reveals the need for further theory contributions and new data developments, and points to …

Persistent link: https://www.econbiz.de/10013228864

Gravity Without Apology : The Science of Elasticities, Distance, and Trade

Carrère, Céline - 2020

Gravity as both fact and theory is one of the great success stories of recent research on international trade, and has … general-equilibrium system. Next, we point out some anomalies with the theory: mounting evidence against constant trade …

Persistent link: https://www.econbiz.de/10012839359

Gravity Models and the Law of Large Numbers

Jareb, Colin - 2020

Modern quantitative theories of international trade rely on the probabilistic representation of technology and the assumption of the Law of Large Numbers (LLN), which ensures that when the number of traded goods goes to infinity, trade flows can be expressed via a deterministic gravity equation...

Persistent link: https://www.econbiz.de/10012822695

Gravity at Sixty : The Workhorse Model of Trade

Yotov, Yoto - 2022

naive reduced-form estimating equation and apply it without guidance from theory, while others are skeptical about its …

Persistent link: https://www.econbiz.de/10013300861

Trade Costs, Market Access and Economic Geography : Why the Empirical Specification of Trade Costs Matters

Bosker, Erik Maarten; Garretsen, Harry - 2021

Trade costs are crucial in new economic geography (NEG) models. The unavailability of actual trade costs data requires the approximation of trade costs. Most NEG studies do not deal with the ramifications of the particular trade costs specification used. This paper shows that the specification...

Persistent link: https://www.econbiz.de/10013316892

The Term Structure of Interest Rates in a Heterogeneous Monetary Union

Costain, James; Nuño, Galo; Thomas, Carlos - 2022

We build a no-arbitrage model of the yield curves in a heterogeneous monetary union with sovereign default risk, which can account for the asymmetric shifts in euro area yields during the Covid-19 pandemic. We derive an affine term structure solution, and decompose yields into term premium and...

Persistent link: https://www.econbiz.de/10014080055

Designing the Policy Mix in a Monetary Union

Kempf, Hubert - 2020

This paper studies the design of the policy mix in a monetary union, that is, the institutional arrangement specifying the relationships between the various policymakers present in the union and the extent of their capacity of action. It is assumed that policymakers do not cooperate. Detailing...

Persistent link: https://www.econbiz.de/10012832189

The Eurozone as an Inflation Target Zone

Della Posta, Pompeo; Tamborini, Roberto - 2022

In the revised monetary policy strategy of the European Central Bank (ECB), “price stability is best maintained by aiming for two per cent inflation over the medium term”, with “symmetric commitment” to this target. “Symmetry means that the Governing Council considers negative and...

Persistent link: https://www.econbiz.de/10014243104

A risk allocation approach to optimal exchange rate policy

Mundaca, B. Gabriela; Strand, Jon - 2004

We derive the optimal exchange rate policy for a small open economy subject to terms-oftrade shocks. Firm owners and workers are risk averse but workers more so. Wages are given or partially indexed in the short run, and capital markets are imperfect. The government sets the exchange rate to...

Persistent link: https://www.econbiz.de/10010261106

The effect of monetary unification on public debt and its real return

Beetsma, Roel; Vermeylen, Koen - 2005

We explore the implications of monetary unification for real interest rates and (relative) public debt levels. The adoption of a common monetary policy renders the risk-return characteristics of the participating countries more similar, so that the substitutability of their public debt increases...

Persistent link: https://www.econbiz.de/10010261138