We study the changing international transmission of US financial shocks over the period 1971-2009. Financial shocks are defined as unexpected changes of a financial conditions index (FCI), recently developed by Hatzius et al. (2010), for the US. We use a time-varying factor-augmented VAR to...

Most Western economists and policy makers agree that the Yuan is significantly undervalued and push the Chinese government for a large nominal revaluation of the Yuan. This paper, while surveying recent research on Chinese exchange rate policy, gives some new insights into this issue. Notably,...

This paper uses regression analyses to explain the different output performance in the 27 countries in the EU based on measures of their pre-existing vulnerability and resilience. Rapid financial deepening and high financial leverage, both domestically and externally, were followed by larger...

Reduction of large and persistent external imbalances is currently a key focus of G-20 discussions. The paper argues that in a progressively multipolar world economy, the goals of global rebalancing, growth, and development are increasingly inter-linked. Growth-oriented rebalancing calls for...

Micro-based exchange-rate research examines the determination and behavior of spot exchange rates in an environment that replicates the key features of trading in the foreign exchange (FX) market. Traditional macro exchange-rate models play little attention to how trading in the FX market...

In this paper we study the macroeconomic effects of large exchange rate appreciations. Using a sample of 128 countries from 1960-2008, we identify large nominal and real appreciations shocks and study their macroeconomic effects in a dummy-augmented panel autoregressive model. Our results show...

This paper quantitatively shows that the wealth effect on leisure plays a determining role in generating negative co-movement of employment across countries. Hence, even without restrictions on international capital mobility, a positive cross-country correlation of labor can be obtained by...

We revisit a classic question in international economics: how does a country's productivity growth affect worldwide real incomes through international trade? We first identify the channels through which productivity shocks transmit in a model featuring inter-industry trade as in Ricardo (1817),...

"After decades of trial, error, and occasional regress the pieces of a successful Latin American economic model can be seen scattered among the leading economies of the region. The most traditional macroeconomic maladies of the emerging world - such as chronic fiscal imbalances and monetary...

In this document we evaluate how macroeconomic conditions influence the amount of remittances sent to Mexico from the United States in the long-run and in the short-run. Specifically, we perform cointegration tests to determine the existence and magnitude of common trends between remittances and...