Search Results
Journal Article
Burger survey provides taste of international economics
An annual survey on the price of a hamburger in countries around the globe provides a surprisingly meaty lesson about relative currency valuations.
Working Paper
Pass-through estimates and the choice of an exchange rate index
We examine exchange rate pass-through into U.S. import prices in 29 manufacturing industries using eight exchange rate indexes. These indexes vary by the number currencies included; whether the weight on each currency is based on total trade with the United States or solely imports; and, whether the weights vary by industry. Our results indicate that pass-through is generally incomplete but varies across industries. Moreover, pass-through is sensitive to the exchange rate index. Using bootstrapped J tests we show that major currency indexes perform better than their broad currency ...
Working Paper
A simple model of international capital flows, exchange rate risk, and portfolio choice
This paper examines international capital flows in the context of a simple Diamond-Dybvig model in which there are neither moral hazard nor adverse selection problems, thus isolating exchange rate risk as the propagator of capital flows. The model shows that adverse changes in exchange rate expectations can result in "hot money" flows even when a bank's balance sheet is perfectly transparent and its assets have a positive net present value in local currency terms. The model also indicates that foreign deposit guarantees even in the absence of a change in the bank's portfolio can increase ...
Journal Article
The unemployment rate: a reliable statistic?
Working Paper
Macroeconomic policy effects in a monetary union
This paper develops a two-country model of a monetary union. In order to analyze fully the linkages between the countries, the model specifies structural equations for the goods, money and bond markets in each country. Interdependencies arise through trade, the asset markets, and a common currency. The model also includes a supply side for each economy based on an expectations augmented Phillips curve. Using this model it is possible to trace the shifts in aggregate demand and aggregate supply in both countries resulting from a change in fiscal and monetary policies. The results suggest that ...
Working Paper
To chain or not to chain trade-weighted exchange rate indexes
With the advent of chain calculations for the U.S. national income and product accounts, it seems reasonable to contemplate using the chain approach for other indexes, such as trade-weighted exchange rates (TWEXs). A fundamental criticism of measuring the growth of gross domestic product by a fixed-base-year method is that the estimates are highly sensitive, especially when the economy?s structure is changing dramatically, to the arbitrary choice of the base year. Such a criticism can be levied against TWEXs. In fact, even TWEXs constructed using a Paasche index rather than a Laspeyres index ...
Journal Article
Growth and the current account deficit
Working Paper
The role of the euro as an international currency
The creation of the euro will link an economy that is nearly as large and as open as the United States. Does this imply that the euro will rival the role of the dollar as an international currency? This paper addresses this question through an examination of the determinants of the use of an international currency. It examines both the prospects of the euro becoming an international currency and the implications for the European Union and the United States.
Working Paper
Government mandated private pensions: a dependable foundation for retirement security?
We develop a model of an overlapping generations economy characterized by private pensions where risk averse agents face both longevity and investment risks. The government mitigates the effects of longevity risk by mandating that individuals purchase annuities. Investment risk arises since the returns on annuities deviate randomly from actuarial fairness as a result of differences in the costs of administering pension funds. Thus, identical agents' pensions may yield drastically different returns: the government's pension policy is not horizontally equitable. We examine whether policies ...