Search Results
Discussion Paper
Reviving mortgage securitization: lessons from the Brady Plan and duration analysis
We review the period of the Latin American debt crisis in order to draw policy analogies from that experience for current U.S. credit securitization markets. During the earlier episode the Brady Plan used a zero-coupon U.S. Treasury security to provide a credit enhancement for the troubled assets. This revitalized the market for Latin American debt by: (1) ameliorating the dual solvency problem that affected both creditors and debtors, and (2) revealing asset prices as dominated by risk fundamentals rather than by short-run factors. The cost of the Brady plan was quite small relative to its ...
Working Paper
Determinants of Japanese direct investment in U.S. manufacturing industries
The rapid rise in Japanese owned assets in the United States and the substantial fall of the dollar against the yen naturally raises the question of whether there is a causal relationship between Japanese direct investment and the yen/dollar exchange rate. ; This paper contributes in two ways to the analysis of the direct investment-exchange rate link. First, it presents a hybrid model of direct investment which incorporates insights from both portfolio balance models and industrial-organization-based models of direct investment. Second, it tests and compares these three models of direct ...
Working Paper
A framework for analyzing the process of financial innovation
The following note presents a framework for analyzing financial management techniques and financial product innovation. The framework attempts to illustrate how characteristics of the economic system and its participants motivate financing needs and encourage innovations in financing techniques. New sets of financial contracts are the joint product of (1) changes in technology and in the international macro environment of asset prices; (2) the interplay of individual market participant's existing financial exposures; and (3) the presence of fruitful cross-market arbitrage opportunities based ...
Working Paper
Globalization and productivity in the United States and Germany
This paper investigates the impact of globalization on productivity growth and the procyclicality of productivity growth in manufacturing industries in the United States and Germany. For U.S. industries, the analysis suggests that changes in international demand affect productivity growth differently from changes in exposure to international competition. An increase in foreign demand for U.S. exports raises trend productivity growth, but to a lesser degree than does a similar demand shock from domestic buyers. On the other hand, whereas an increase in U.S. imports reduces trend productivity ...
Working Paper
Trade policy for the multiple product declining industry
Increasing returns to scale and scope in production technology combined with product substitutability in demand yields an environment where free trade may not maximize domestic country welfare. If not, there is an optimal tax on imports that depends on the cross-elasticity of demand between the products in the spectrum and on the degree of economies of scale and scope in technology. However, even if protection may be warranted in the short run, the long run solution is consistent with the theory of comparative advantage.
Working Paper
Protection and retaliation: changing the rules of the game
An examination of the macroeconomic, political, and institutional environment of the 1930s and the 1980s suggests a set of stylized facts associated with periods of trade tension and incidents of trade retaliation. Periods of macroeconomic stress precipitate changes in the conduct of and implementation of U.S. trade policy, which then can lead to escalating trade tension, protectionist measures, and perhaps retaliation. Macroeconomic stress, especially when linked to external events, decreases the political benefits of following a liberal trade policy and changes the economic consequences of ...
Working Paper
Fiscal implications of the transition from planned to market economy
The transition from a centrally planned to a market-based economic system should change fundamentally the roles of government and public enterprises in the East-Central European countries of Hungary, Poland, and the Czech and Slovak Federated Republic (CSFR). The size of government should diminish, and that of the private sector increase, as subsidies, which are difficult to justify at market prices, are phased out. Taxes in centrally planned economies tend to be highly distortionary relative to those in market economies, making a restructuring of the tax system desirable to improve ...
Conference Paper
The U.S. external deficit: its causes and persistence
Journal Article
U.S. international transactions in 1993
Journal Article
Prices, profit margins, and exchange rates