Meta tags:
description=Discussion about the latest research in Open Macroeconomics;

Headings (most frequently used words):

nep, opm, blog, the, and, trade, globalization, international, follow, on, monetary, policy, leverage, constraints, transmission, of, shocks, risk, sharing, through, equity, diversification, or, exchange, rate, hedging, estimating, border, effect, some, new, evidence, individual, gains, from, me, twitter, blogs, via, email, recent, comments, latest, papers, archives, meta,

Text of the page (most frequently used words):
the (77), and (40), trade (19), nep (16), countries (16), with (15), opm (14), that (14), price (14), model (12), this (11), may (11), blog (10), repec (10), #border (9), income (9), when (9), country (9), firms (9), productivity (9), international (8), for (8), costs (8), monetary (7), policy (7), comment (7), interesting (7), which (7), from (7), domestic (7), prices (7), exporting (7), 2009 (6), equilibrium (6), posted (6), martin (6), permalink (6), uncategorized (6), are (6), across (6), risk (6), sharing (6), leverage (6), constraints (6), inflation (6), average (6), macroeconomics (5), financial (5), how (5), two (5), due (5), product (5), diversity (5), effects (5), show (5), they (5), lower (5), http (5), org (5), one (5), equity (5), shocks (5), wordpress (4), com (4), log (4), comments (4), has (4), effect (4), some (4), new (4), globalization (4), follow (4), email (4), open (4), general (4), leave (4), results (4), authors (4), these (4), only (4), home (4), shock (4), portfolio (4), diversification (4), macroeconomic (4), about (4), through (4), asset (4), among (4), transmission (4), export (4), discussion (4), account (3), join (3), feed (3), september (3), october (3), 2010 (3), latest (3), business (3), would (3), see (3), into (3), framework (3), gains (3), competition (3), always (3), shrink (3), rich (3), consequently (3), there (3), more (3), impact (3), their (3), gdp (3), per (3), capita (3), all (3), borders (3), discontinuity (3), large (3), canadian (3), retail (3), wholesale (3), variation (3), changes (3), foreign (3), positive (3), devereux (3), models (3), full (3), setting (3), bind (3), get (2), site (2), report (2), sign (2), subscribed (2), subscribe (2), have (2), other (2), subscribers (2), create (2), try (2), papers (2), estimating (2), evidence (2), recent (2), address (2), your (2), posts (2), rss (2), dynamic (2), economics (2), productive (2), extent (2), allows (2), those (2), behrens (2), murata (2), expands (2), poor (2), everyone (2), gain (2), while (2), lose (2), because (2), than (2), individual (2), between (2), within (2), although (2), markups (2), both (2), variety (2), depends (2), relative (2), higher (2), importance (2), increases (2), population (2), well (2), suggest (2), degree (2), provides (2), predictions (2), can (2), properties (2), regression (2), approach (2), dataset (2), national (2), markets (2), stores (2), develop (2), estimate (2), three (2), facts (2), high (2), percent (2), almost (2), not (2), gaps (2), nominal (2), exchange (2), rate (2), provide (2), result (2), sticky (2), complete (2), long (2), under (2), negative (2), implications (2), 2008 (2), empirical (2), puzzles (2), another (2), puzzle (2), bias (2), however (2), portfolios (2), stickiness (2), wage (2), yetman (2), cycle (2), fall (2), sales (2), drop (2), institutions (2), linkages (2), author (2), heterogeneous (2), decisions (2), contractionary (2), causes (2), but (2), labor (2), consumer (2), targeted (2), research (2), started, design, like, collapse, bar, manage, subscriptions, view, reader, content, privacy, already, now, free, website, entries, meta, archives, error, occurred, probably, down, again, later, simiso, fabian, mkhonta, enter, receive, notifications, via, pay, cashless, society, ltv, unemployment, inequality, poverty, int, his, economic, history, dge, ara, mena, middle, east, north, africa, blogs, tweets, twitter, change, comparative, advantage, factors, introduced, also, sense, assumed, variable, elasticity, substitution, empirically, relevant, modeling, strategy, decomposition, pro, improves, must, situations, citizens, value, loss, efficiency, analyze, monopolistic, featuring, procompetitive, heterogeneity, reduces, its, position, world, distribution, latter, occurs, richer, consumers, versus, quantity, illustrate, using, data, 186, parameter, estimates, distributions, our, similar, makes, agents, better, off, whereas, having, adversely, affect, lvl, lacicr, 0928, kristian, yasusada, build, horizontal, differentiation, based, salop, 1979, circular, city, segmentation, endogenous, sizes, distance, substitutability, locations, itself, numerous, novel, number, then, scanner, retailer, document, match, several, very, contribution, what, currencies, impose, segment, answer, question, use, level, grocery, chain, united, states, canada, pricing, location, employ, interpret, main, median, absolute, cost, discontinuities, adjacent, either, side, contrast, close, gap, entirely, driven, move, bound, fip, fedbwp, gita, gopinath, pierre, olivier, gourinchas, chang, tai, hsieh, nicholas, terms, adjustments, majority, benefits, true, flexible, linearized, version, dsge, equities, achieves, many, parametrizations, households, short, unexpected, currency, depreciation, offset, wealth, inefficient, selection, imperfect, information, uncertainty, etc, sutherland, cole, obstfeld, 1991, known, concern, divergence, outcomes, consumption, commonly, believed, related, series, require, much, typically, calibrated, conclusion, holds, range, assumptions, preferences, pcp, lcp, without, rigidity, imf, imfwpa, 138, charles, engel, akito, matsumoto, hedging, extend, krugman, partial, multiplier, blown, equlibrium, propagate, strongly, inter, connected, balance, sheets, values, leads, thus, propagating, force, borrowing, reductions, real, adverse, magnified, feedback, loop, evolves, where, alternative, means, experience, drawn, attention, interdependence, independently, traditional, paper, develops, interdependent, holdings, constrained, absence, movements, presence, diversified, combination, introduces, powerful, channel, correlation, aggregates, during, downturns, quite, independent, size, rba, rbardp, rdp2009, michael, james, influence, firm, melitz, 2003, fixed, following, decline, drives, bill, marginal, allocation, most, continue, exporters, mechanism, reality, operate, longer, time, horizons, proposed, quickly, lead, rates, cause, resource, reallocation, understand, aggregate, integration, capture, inverse, raises, lowers, magnitude, greater, governments, target, opposed, generates, quantitatively, small, same, far, larger, rise, hkm, wpaper, 042010, dudley, cooke, experiment, explore, feasibility, scientific, disseminates, every, week, working, field, them, editor, selects, discussed, invited, stay, civil, will, removed, encourage, others, read,

Text of the page (random words):
nep opm blog discussion about the latest research in open macroeconomics nep opm blog discussion about the latest research in open macroeconomics home about the nep opm blog september 27 2009 this blog is an experiment to explore the feasibility of scientific discussion on an economics blog nep opm disseminates every week new working papers in the field of open macroeconomics among them the nep opm editor selects one to be discussed everyone is invited to comment try to stay civil or your comments will be removed and encourage others to read or join in the discussion leave a comment uncategorized permalink posted by martin b monetary policy and trade globalization may 10 2010 by dudley cooke http d repec org n u repec hkm wpaper 042010 r opm i develop a two country general equilibrium model with heterogeneous price setting firms to understand how shocks to monetary policy and aggregate labor productivity impact trade integration which i capture through the inverse average productivity of exporting firms a contractionary domestic monetary policy shock raises the average productivity of domestic exporting firms but lowers the average productivity of foreign exporting firms the magnitude of these changes is greater when governments target domestic price inflation as opposed to consumer price inflation a positive shock to domestic labor productivity generates positive although quantitatively small changes in the average productivity of all exporting firms when consumer price inflation is targeted when domestic price inflation is targeted the same shock causes a fall in the average productivity of domestic exporting firms and a far larger rise in the productivity of foreign exporting firms the author allows monetary policy shocks to influence heterogeneous firm export decisions in a model setting a la melitz 2003 fixed costs of exporting shrink following a contractionary monetary policy due to the inflation decline more firms export which drives up their wage bill and consequently their marginal costs this causes re allocation only the most productive firms continue to export and increases the average productivity of exporters the transmission mechanism is interesting but in reality may operate at longer time horizons than those proposed by the author how quickly do monetary policy decisions lead to lower inflation rates and consequently lower export costs that cause the resource reallocation 1 comment uncategorized permalink posted by martin b leverage constraints and the international transmission of shocks may 2 2010 by michael b devereux and james yetman http d repec org n u repec rba rbardp rdp2009 08 r opm recent macroeconomic experience has drawn attention to the importance of interdependence among countries through financial markets and institutions independently of traditional trade linkages this paper develops a model of the international transmission of shocks due to interdependent portfolio holdings among leverage constrained financial institutions in the absence of leverage constraints international portfolio diversification has no implications for macroeconomic co movements when leverage constraints bind however the presence of diversified portfolios in combination with these constraints introduces a powerful financial transmission channel which results in a high correlation among macroeconomic aggregates during business cycle downturns quite independent of the size of international trade linkages devereux and yetman extend krugman s 2008 partial equilibrium international financial multiplier into a full blown general equlibrium model when leverage constraints bind business cycle shocks propagate strongly across countries through inter connected balance sheets a fall in asset values in one country leads to asset sales in another country thus propagating the asset price drop the asset sales force borrowing reductions leverage constraints bind which have negative real effects in all countries the adverse effects are magnified by the price drop feedback loop it would be interesting to see how this result evolves in a more complete framework where trade provides alternative means of diversification leave a comment uncategorized permalink posted by martin b international risk sharing through equity diversification or exchange rate hedging october 28 2009 by charles engel and akito matsumoto http d repec org n u repec imf imfwpa 09 138 r opm well known empirical puzzles in international macroeconomics concern the large divergence of equilibrium outcomes for consumption across countries from the predictions of models with full risk sharing it is commonly believed that these risk sharing puzzles are related to another empirical puzzle the home bias in equity puzzle however we show in a series of dynamic models that the full risk sharing equilibrium may not require much diversification of equity portfolios when there is price stickiness of the degree typically calibrated in macroeconomic models this conclusion holds under a range of assumptions about home bias in preferences price setting as pcp or lcp and with or without nominal wage stickiness as long as there is some price rigidity the authors show that cole and obstfeld 1991 result that terms of trade adjustments provide for the majority of the risk sharing benefits is only true when prices are flexible in a log linearized version of a two country dsge model with sticky prices trade in only equities achieves complete risk sharing for many parametrizations households are long on home equity and short on foreign equity so that an unexpected currency depreciation which has positive income effects under sticky prices is offset by a negative wealth shock to the portfolio as with the results of e g devereux and sutherland 2008 it may be interesting to see the implications of inefficient portfolio selection due to imperfect information uncertainty etc leave a comment uncategorized permalink posted by martin b estimating the border effect some new evidence october 18 2009 by gita gopinath pierre olivier gourinchas chang tai hsieh nicholas li http d repec org n u repec fip fedbwp 09 10 r opm to what extent do national borders and national currencies impose costs that segment markets across countries to answer this question the authors use a dataset with product level retail prices and wholesale costs for a large grocery chain with stores in the united states and canada they develop a model of pricing by location and employ a regression discontinuity approach to estimate and interpret the border effect they report three main facts one the median absolute retail price and wholesale cost discontinuities between adjacent stores on either side of the u s canadian border are as high as 21 percent in contrast within country border discontinuity is close to 0 percent two the variation in the retail price gap at the border is almost entirely driven by variation in wholesale costs not by variation in markups three the border gaps in prices and costs co move almost one to one with changes in the u s canadian nominal exchange rate they show these facts suggest that the price gaps they estimate provide only a lower bound on border costs the authors build a two country model of horizontal differentiation based on salop s 1979 circular city model in which degree of segmentation is endogenous and depends on the sizes of countries distance from the border and substitutability across locations the model itself provides numerous novel predictions and can account for a number of properties of prices across borders the authors then discontinuity regression approach on a scanner price dataset of a large us canadian retailer to document how the model can match several interesting properties of prices across borders a very interesting contribution 1 comment uncategorized permalink posted by martin b globalization and individual gains from trade september 27 2009 by kristian behrens and yasusada murata http d repec org n u repec lvl lacicr 0928 r opm we analyze the impact of globalization on individual gains from trade in a general equilibrium model of monopolistic competition featuring product diversity procompetitive effects and income heterogeneity between and within countries we show that although trade reduces markups in both countries its impact on variety depends on their relative position in the world income distribution product diversity in the lower income country always expands while that in the higher income country may shrink when the latter occurs the richer consumers in the higher income country may lose from trade because the relative importance of variety versus quantity increases with income we illustrate this effect using data on gdp per capita and population for 186 countries as well as parameter estimates for domestic income distributions our results suggest that u s trade with countries of similar gdp per capita makes all agents in both countries better off whereas trade with countries having lower gdp per capita may adversely affect up to 11 of the u s population in a framework that allows decomposition of gains from trade into those due to product diversity and due to pro competition effects behrens and murata show that product diversity always expands with trade in poor countries may shrink in rich countries and that trade always improves competition consequently everyone in poor countries must gain while there may be situations when some rich citizens of rich countries lose from trade because they value loss of diversity more than gain in efficiency it would be interesting to see how the results change if comparative advantage and two productive factors are introduced into the model s framework it would also be interesting to get a sense of the extent to which assumed variable elasticity of substitution with income is an empirically relevant modeling strategy leave a comment uncategorized permalink posted by martin b follow me on twitter my tweets nep blogs nep ara economics of the mena middle east and north africa nep dge dynamic general equilibrium nep his business economic and financial history nep int international trade nep ltv unemployment inequality and poverty nep opm open macroeconomics nep pay the cashless society rss posts rss comments follow blog via email enter your email address to follow this blog and receive notifications of new posts by email email address follow join 35 other subscribers recent comments simiso fabian mkhonta on monetary policy and trade globalization m h on estimating the border effect some new evidence latest papers on nep opm an error has occurred the feed is probably down try again later archives may 2010 2 october 2009 2 september 2009 2 meta create account log in entries feed comments feed wordpress com create a free website or blog at wordpress com subscribe subscribed nep opm blog join 35 other subscribers sign me up already have a wordpress com account log in now privacy nep opm blog subscribe subscribed sign up log in report this content view site in reader manage subscriptions collapse this bar design a site like this with wordpress com get started