Empirical evidence suggests that real exchange rates (RER) behave differently in developed and developing countries. We develop an exogenous 2-sector growth model in which RER determination depends on the country's capacity to borrow from international capital markets. The country faces a...

Empirical evidence suggests that real exchange rates (RER) behave differently in developed and developing countries. We develop an overlapping generations two-sector exogenous growth model in which RER determination may depend on the country's capacity to borrow from international capital...

Empirical evidence on the growth benefits of capital inflows is mixed. The growth benefits accruing from capital inflows also appear to be larger for high savings countries. We explain this phenomenon using an OLG model of endogenous growth in open economies with borrowing constraints that can...

Empirical evidence on the growth benefits of capital inflows is mixed. The growth benefits accruing from capital inflows also appear to be larger for high savings countries. We explain this phenomenon using an OLG model of endogenous growth in open economies with borrowing constraints that can...

Purpose – The paper aims to re-examine the stationarity properties of unemployment rates in 12 European Union (EU) countries over the period 1988: I-1999: IV. Design/methodology/approach – This paper applies a battery of second-generation panel unit root tests that allow for cross-sectional...

In this paper we propose Granger (non-)causality tests based on a VAR model allowing for time-varying coefficients. The functional form of the time-varying coefficients is a logistic smooth transition autoregressive (LSTAR) model using time as the transition variable. The model allows for...

We present time-series evidence on output convergence for 14 OECD countries allowing for time-varying determinants of transitional dynamics. We develop a simple theoretical model and test for non-stationarity in relative outputs using stationary covariates finding strong support for convergence.

The recent literature on Purchasing Power Parity (PPP) has emphasized the role of two phenomena that may lead to the rejection of the PPP hypothesis: structural breaks and non-linear adjustment induced by transaction costs. These two hypotheses are analyzed separately in the literature. We...

This paper develops a two goods overlapping generations model (OLG) of a semi-small open economy. Due to the OLG structure, the world interest rate and the domestic rate of time preference need not to be equal. Consequently, this setting represents the minimal real framework to study the effects...