The federal government has implemented an earned income tax credit – what it has called the Working Income Tax Benefit – in the 2007 Budget. Edmund Phelps has argued that the earned income tax credit in the United States should be replaced with an employment subsidy. This paper assesses the...

The federal government has implemented an earned income tax credit what it has called the Working Income Tax Benefit in the 2007 Budget. Edmund Phelps has argued that the earned income tax credit in the United States should be replaced with an employment subsidy. This paper assesses the...

The present paper investigates five episodes of currency collapse from the perspective of non-financial firms operating in Argentina, Brazil and Mexico. We focus on two aspects: wealth and income transfers from borrowing firms to lenders and firm heterogeneity. At the firm level, we find that...

This paper analyzes the effects of the real value of the dollar on investment in US domestic manufacturing using aggregate data for 1973-2004. Econometric estimation shows a negative effect that is much larger than has been found in any previous study. The exchange rate affects investment...

In this paper, we test three popular versions of the monetary model (flexible price, forward-looking and real interest differential models) for the OECD member countries by applying Johansen cointegration technique. Based on country-by-country analysis, we conclude that monetary models do not...

This paper makes an analysis of the literature on the international purchasing power parity (PPP). One explanation for not fulfilling the PPC is the Harrod-Balassa- Samuelson effect, as well as the presence of a structural change in the economy. The literature reveals that empirical results in...

This paper aims to survey the literature about the Law of One Price in order to document its failure in terms of actual application. After a brief theoretical overview, which starts from classical economists' thought, the reported literature has been classified on the basis of three main...

This paper estimates the degree of persistence of 16 long-horizon real exchange rates relative to the US dollar. We use nonparametric operational algorithms by El-Gamal and Ryu (2006) for general nonlinear models based on two statistical notions: the short memory in mean (SMM) and the short...

The large and persistent deviations of nominal exchange rates from their purchasing power parities comprise a key stylized fact in international economics. This paper sheds light on these persistent deviations by combining two disparate strands of empirical work. The first strand focuses on real...