Foreign Direct Investments (FDI) are often considered long-term and less sensitive to global shocks as they involve large amounts of capital investment that are costly to reverse. This study examines whether a pandemic arbitrage through “distance” in COVID-19 infection rates impacts FDI....

The recent rise of digital currencies opens the door to their use in parallel alongside official currencies ("dollar'') for pricing and transactions. We construct a simple New Keynesian framework with parallel currencies as pricing units and sticky prices. Relative prices become a state...

The recent rise of digital currencies opens the door to their use in parallel alongside official currencies (“dollar”) for pricing and transactions. We construct a simple New Keynesian framework with parallel currencies as pricing units and sticky prices. Relative prices become a state...

The rise of digital currencies may result in domestic parallel currencies. Their exchange rate shocks will present a new challenge for monetary policy. We analyze these issues in a New Keynesian framework, where firms can set prices in one of the available currencies. Price rigidity translates a...

Recent empirical works corroborate importance of sentiment in asset pricing. We further propose that sentiment may not affect everyone in a homogeneous way. In this paper, we construct a sentiment indicator taking into consideration behavioral heterogeneity of interacting investors. From our...