We use a two-sector neoclassical open economy model with traded and non-traded goods to investigate both the aggregate and the sectoral effects of temporary fiscal shocks. One central finding is that both sectoral capital intensities and labor supply elasticity matter in determining the response...

Using a two country DGSE combining nominal rigidities and financial frictions, we show that the persistence of output and inflation asymmetries observed since 1999 in an increasingly integrated EMU is not necessarily puzzling. Only the integration of final goods markets unambiguously leads to a...

Since the mid-1980s, an extensive empirical literature has investegated the relationship between the US fiscal and trade deficits without reaching any consensus. Two elements may account for these conflicting results. First, considering data in levels versus stationarized data has an impact on...

We use a two-good dynamic optimizing small open economy model to provide a new explanation of the J-Curve phenomenon in terms of habit persistence in consumption and sluggishness in capital adjustment. The results differ markedly depending on the permanence or temporary nature of the relative...

This contribution shows that the persistence and the time of occurence of the shock matter in determining the long-run macroeconomic aggregates’ responses after permanent and transitory terms of trade shocks. Within a simple two-good small open economy model, we differentiate analyticaly...

Commodity currency literature recently stressed the importance of commodity prices as a determinant of real exchange rates in developing countries (Cashin, Cespedes and Sahay 2004). We provide new empirical evidence on this issue by focusing on countries which are specialized in the export of...

This paper provides new empirical evidence about the relationship that may exist between real exchange rates and commodity prices in developing countries that are specialized in the export of a main primary commodity. It investigates how structural factors like the exchange rate regime, the...

Dans un monde à deux pays où la mobilité du capital est parfaite, on analyse l'interdépendance des pays lorsque les agents n'ont pas la même élasticité de substitution intertemporelle dans les deux pays. Cette hypothèse implique que plus l'élasticité de substitution intertemporelle est...

Nous examinons l'effet de la situation économique de l'Allemagne après la réunification sur les taux d'intérêt en Europe et sur les taux de change vis-à-vis du dollar. Nous nous demandons en particulier ce qu'est la perspective la plus probable pour les parités, l'écart de taux...

While most of the literature on the determination of real exchange rates is focused on the role of standard macroeconomic variables, there exists however a few papers that are more concerned by the impact of factors which are usually considered to play a key role in the process of economic...