We discuss the meaning of the concept of implicit pension debt (unfunded pension liabilities) from a public finance perspective and contrast different definitions such a variable with the notion of public debt. We conclude that the implicit pension debt is deeply different from public debt but...

Recent research using time series cointegration techniques has suggested that fi scal policy in the EU-15 countries may have been on unsustainable path during 1970-2003. However, the time series techniques employed are know to have low power in small samples. The results from employing panel...

This paper estimates Pakistan’s’ external debt by using Debt Sustainability Assessment (DSA) methodology developed by IMF and World Bank [IDA and IMF (2004, 2007), IMF (2005) and World Bank (2005)]. The main findings of the paper are that in response to small individual shocks to main...

A simulation exercise is conducted to find out if the profitability of forecasting-based currency trading is more related to the ability of the underlying model to predict the direction of change than the magnitude of the forecasting error. Theoretical considerations show that a correct...

We investigate long-run relations and short-run dynamics between China’s bilateral trade balance and real exchange rates with thirteen major trading partners over 1981-2008. Maximum likelihood tests of cointegration reveal no evidence of significant long-run relationship between the two...

A small open economy model emphasizing the endogenous interestrate arbitrage was employed to examine whether arbitrage activities would dampen or augment exchange rate volatility against random disturbances. Based on numerical simulation, increased risk aversion of arbitragers was observed to...

The objective of this study is to examine the impact of exchange rate on Nigeria’s trade balance. Time series data on trade balance, external reserves, exchange rate, money supply and real GDP were used in the analysis and the data were subjected to unit root tests to determine their time...

The paper critically considers the endogenous Optimum Currency Areas (or e-OCAs) theory, focussing initially on early studies having identified a relevant link between the creation of a monetary union and an upgrading of trade intensity between member countries, on the one hand, and the increase...

While many explanations have been put forward for the failure of exchange rate models to outperform the random walk in out-of-sample forecasting, a simple explanation is the use of measures of forecasting accuracy that depend entirely on the magnitude of the forecasting error. By using simulated...

In this paper we investigate the skirmishes that the US dollar and the euro had from 2007 to 2011 and, in particular, the two distinct sharp falls that the single currency had in 2008 and 2010. We basically consider how impulses coming from domestic money markets impact on the USD/EUR exchange...