Testing for unit roots in short-term interest rates plays a key role in the empirical modelling of these series. It is widely assumed that the volatility of interest rates follows some time-varying function which is dependent of the level of the series. This may cause distortions in the...

In this paper a Blanchard (1985) type model has been applied to a small open economy to analyse the long-term behaviour of current account balance. It shows, under the assumptions of the model that the current account balance, net-of-government-debt wealth of households, the difference between...

The aim of this paper is to determine whether there have been differences in the effectiveness of the transmission mechanism of monetary policy in Germany, France, Italy, Spain and the United Kingdom since Economic and Monetary Union (EMU) establishment. The analysis is based on the fulfilment...

This paper provides an empirical test of the Fisher effect and of the real interest parity. The objetive is to determinate the behavior of the ex-ante real interest that condicionate the intertemporal savings and investment decisions. The method used is the time series properties of the data,...

In this paper we compare the results of applying two different approaches to the determination of real exchange rates. The first approach is based on relative fiscal impulses, as defined by the IMF, that account for demand shocks and was implicitly proposed by Obsfeld (1985). For the second...