This paper demonstrates how a currency board can become vulnerable to a crises in which the policymaker is forced to devalue. The model is built from two blocks: first, incomplete information about the devaluation cost faced by the policymaker; and second, unemployment persistence. Incomplete...

Firms make strategic choices about foreign market access on the basis of location factors in the home and export countries, as well as on their ownership advantages. The empirical analysis is based on a sample of 837 manufacturing companies in a typical middle-income country (Spain), in which...

This paper looks at the reaction by industry insiders, industry analysts and competing firms, to the announcement of M&As that took place in the European Union financial industry in the period 1998-2006. Analysts covering firms involved in an M&A transaction do not significantly alter their...

This paper presents an empirical analysis of transmission rates from exchange rate movements to import prices, across countries and product categories, in the euro area over the last fifteen years. Our results show that the transmission of exchange rate changes to import prices in the short run...

This paper uses an intertemporal model of the current account to evaluate the fluctuations in current account balances experienced by Euro area countries over the last three decades. In the model current account balances are used to smooth consumption and they are driven by expectations about...

This paper investigates the empirical effect of volatility on irreversible investments. We use a sample of chemical products in the United States and the European Union to test the impact of volatility on new investments in capacity. We distinguish among three sources of volatility: exchange...

The choice of unit of account in longer term unhedged contracts involving parties from multiple countries influences the size and distribution of currency risk. Contracts currently predominantly use the same unit as means of payment and as unit of account. The relative performance of such single...

The authors review recent international price comparisons to examine the veracity of claims about “rip-off Britainâ€. They reach three conclusions. First, methodologically, the data requirements for a meaningful price comparison are very demanding and most of the evidence does not meet...