Search Results
Working Paper
Why hasn't trade grown faster than income? Inter-industry trade over the past century
Over the past century, the ratio of international trade to GDP has not grown substantially for most major OECD economies. We conjecture that growth in intra-industry trade has been offset by a decline in intra-industry trade. Inter-industry trade may have declined either because of biased growth in factor inputs so that factor proportions have become more similar, or because preferences have become more similar with rising per capita income.
Working Paper
International coordination of macroeconomic policies: still alive in the new millennium?
In this paper we provide two building blocks for an analysis of international policy coordination: (1) a survey of models of policy coordination, and (2) an account of experience with policy coordination among the G-7 countries and within Europe since the breakdown of the Bretton Woods System. Using these building blocks, we investigate the correspondence between the models and experience and attempt to draw lessons for both the modelers and the practitioners. We find that the correspondence is close enough that the models help in analyzing several instances of actual policy coordination, but ...
Working Paper
The global economic implications of German unification
This paper uses a multi-country econometric model to assess the global impact of rapid economic integration of the two Germanys. The fundamental assumptions are that East Germany brings relatively more labor than capital to the union than does West Germany, and that the economic structure of a united Germany is essentially identical to that of pre-unification West Germany. In all of the simulations economic union leads to an acceleration of growth and investment in Germany, a real appreciation of the Deutschemark, and a reduction in Germany's current account surplus. The impact of German ...
Working Paper
Unconventional Monetary and Exchange Rate Policies
This paper explores the direct effects and spillovers of unconventional monetary and exchange rate policies. We find that official purchases of foreign assets have a large positive effect on a country's current account that diminishes considerably as capital mobility rises. There is an important additional effect through the lagged stock of official assets. Official purchases of domestic assets, or quantitative easing (QE), appear to have no significant effect on a country's current account when capital mobility is high, but there is a modest positive impact when capital mobility is low. The ...
Working Paper
What can the data tell us about carry trades in Japanese yen?
This paper examines the available data that may shed light on the carry trade in Japanese yen. We define an individual or a sector to be engaged in the carry trade if it has a short position in yen and a long position in other currencies. The tendency of large yen movements to be skewed toward appreciations is consistent with the existence of substantial carry positions, and other evidence from market prices provides some modest support for an effect from the carry trade. Data on bank loans and bond holdings by currency reveal a large apparent yen carry position of the Japanese official ...
Journal Article
Large-scale asset purchases by the Federal Reserve: did they work?
In this study, authors Joseph Gagnon, Matthew Raskin, Julie Remache and Brian Sack review the Federal Reserve?s experience with implementing the LSAPs between late 2008 and March 2010. They explain that the target fed funds rate was set as low as possible in December 2008. Thus, to further ease the stance of monetary policy as the economic outlook deteriorated, the central bank purchased substantial quantities of assets with medium and long maturities?housing agency debt, agency mortgage-backed securities (MBS) and Treasuries?to drive down private borrowing rates. ; Title of Special Issue: ...
Working Paper
Preventing deflation: lessons from Japan's experience in the 1990s
This paper examines Japan's experience in the first half of the 1990s to shed some light on several issues that arise as inflation declines toward zero. Is it possible to recognize when an economy is moving into a phase of sustained deflation? How quickly should monetary policy respond to sharp declines in inflation? Are there factors that inhibit the monetary transmission mechanism as interest rates approach zero? What is the role for fiscal policy in warding off a deflationary episode? We conclude that Japan's sustained deflationary slump was very much unanticipated by Japanese policymakers ...
Working Paper
Savings rates and output variability in industrial countries
The economics literature offers competing hypotheses about the relationship between savings rates and output variability. This paper examines data for eight industrial countries to determine if there is a discernible pattern between savings rates and cyclical volatility of output. We find a striking coincidence of high gross savings rates and high output variability when real GDP gaps are estimated from a constant growth trend. But there is also strong evidence that this coincidence is an artifact. The major conclusion is that there is not a robust relationship between average gross savings ...
Working Paper
Pricing to market in international trade: evidence from panel data on automobiles and total merchandise
This paper focuses on price discrimination in international trade that is associated with movements in exchange rates. This phenomenon is referred to as "pricing to market." We find strong evidence of pricing to market for Japanese exports of automobiles. We find moderate evidence of such behavior for German auto exports, and very little pricing to market for U.S. auto exports. We conjecture that these sharp differences in export pricing behavior may be due to differences in the extent of overseas production by firms based in these countries. Pricing to market may be more important to firms ...
Working Paper
How pervasive is the product cycle? The empirical dynamics of American and Japanese trade flows
This paper looks for dynamic patterns in international trade flows using multilateral American and Japanese data disaggregated to the four-digit SITC level. Little evidence is found of product-cycle dynamics between 1962 and 1988; rather, goods that begin the sample in surplus (deficit) tend to remain in surplus (deficit) throughout the sample.