We evaluate the effect of exchange rate misalignments on the balance of trade and the role that global value chain participation plays in this effect for 11 new European Union member states. Using heterogeneous panel cointegration methods, we first estimate the real equilibrium exchange rate and...

We estimate the causal effect of natural catastrophes on financial development. We focus on largest catastrophes in developing economies in 1960-2016, employ synthetic control method to compute the counterfactual and use the credit to GDP ratio as the measure of financial development. Our...

We provide a new explanation for why central banks have become transparent over the last three decades. We apply recently developed social interaction panel regression models for the observational data, which allow the identification of peer effects. The identification is based on variations in...

A key parameter in structural models is the Frisch elasticity of labor supply at the extensive margin, but empirical estimates vary greatly. We provide a quantitative synthesis of the literature. To this end, we collect 723 estimates from 36 studies along with 22 explanatory variables reflecting...

We develop a dynamic stochastic general equilibrium model calibrated to US data to examine how monetary policy shocks affect income inequality and the equity premium. The model features Ricardian and non-Ricardian households and shows that a monetary policy tightening causes an endogenous...

Long-term bond yields contain a risk-premium, an important part of which is compensation for inflation risks. The substantial increase in the Fed funds rate in the mid-2000s did not raise long-term US Treasury yields due to the reduction in the term premium (so-called Greenspan conundrum) which...

We examine whether there is contagion from the U.S. stock market to six Central and Eastern European stock markets. We use a novel measure of contagion that examines whether volatility shocks in the U.S. stock market coupled with negative returns are followed by higher co-exceedance between U.S....

We propose a novel way to measure the rule of law intensity of exports at the goods level based on nearly 100 million disaggregated bilateral trade flows around the globe. We categorise goods into three groups: fragmented, primary and other. The theoretical literature on holdup problems...

What are the factors that explain reversals in the implementation of structural reforms? Our main hypothesis is that reversals in different reforms are driven by different factors. This paper uses new reform indicators and presents novel evidence showing that (a) FDI inflows reduce the...