This paper demonstrates effects of economic convergence processes on the foreign exchange behaviour in a monetary modelling approach. Since the exchange rate represents the relative price of two currencies, commonness of stochastic trends between the fundamental determinants of supply and demand...

In this paper, the following question is posed: Can the New KeynesianOpen Economy Model by Galí and Monacelli (2005b) explain “Six MajorPuzzles in International Macroeconomics”, as documented in Obstfeldand Rogoff (2000b)?The model features a small open economy with complete markets,...

We show in a dynamic stochastic general equilibrium framework that the introduction of a common currency by a group of countries with only partially integrated goods markets, incomplete financial markets and no labor migration across member states, significantly increases volatility of...

This paper analyzes the impact of limited enforceable international loans on international risk sharing and trade fluctuations in a two-country two-good endowment economy. Our specification of the punishment threat allows the exclusion from trade to last only finitely many periods and...

In this paper, the following question is posed: Can the New Keynesian Open Economy Model by Galí and Monacelli 2005b) explain "Six Major Puzzles in International Macroeconomics", as documented in Obstfeld and Rogoff (2000b)? The model features a small open economy with complete markets, Calvo...

Using structural VARs, I find that external shocks are an important source of macroeconomic fluctuations in emerging markets. Furthermore, U.S. monetary policy shocks affect quickly and strongly interest rates and the exchange rate in a typical emerging market. The price level and real output in...

Between 1999 and the onset of the economic crisis in 2008 real ex-change rates in Greece, Ireland, Italy, Portugal and Spain appreciated relative to the rest of the euro area. This divergence in competitiveness was reflected in the emergence of current account imbalances. Given that exchange...

International trade has been playing an extremely significant role in China over the last 20 years. This paper is aimed at investigating and understanding the relationship between China's macro-economy and oil price fromthis newperspective. We find strong evidence to suggest that the increase of...

In light of persistent in ation dispersion and rising debt levels in the EMU, this paper investigates the welfare implications of budget-neutral scal policies that counteract in ation di erentials. In a two-country DSGE model of a monetary union with traded and non-traded goods a national scal...

This paper proposes a combination of bifurcation methods and nonlinear moving average as a tool to solve asymmetric DSGE models with portfolio choice. Its performance is compared to the workhorse routine developed by Devereux and Sutherland (2010, 2011). The proposed technique has two...