In this paper we use the Johansen and Juselius cointegration technique t examine the long-run convergenCe between the trade balance and the terms o trade, using quarterly data from Sweden. The results show that the trade balance and the terms of trade are cointegrated in the long run and the...

This study investigates the effects of devaluation on the Turkish gross national product focusing on the stabilization-cum-liberalization policies of the 1980s. The estimations of the reduced form equation suggest the effects of devaluation to be expansionary. Moreover, the results support the...

This paper focuses on the sustainability of Lebanon’s trade deficit over a period characterised by war and reconstruction. Annual and quarterly data on imports and exports were used. Unit root and cointegration tests suggest that imports and exports are cointegrated and the trade balance is...

The Turkish current account has been exploding in the last few years leading to concerns of a crisis. One of the primary factors identified in the rising deficits is the appreciating lira. In addition, income elasticity of exports and imports can also shed light on continuing trade deficits. In...

This contribution embeds the Balassa-Samuelson hypothesis in a general equilibrium model that combines monopolistic competition and markup variations to examine the determinants of relative prices of nontradables. The model emphasizes the role of markup variations as an important aspect driving...

In this paper we consider a two-country New Open Economy Macroeconomics model, and analyze the optimal monetary policy when countries cooperate in the face of a "global liquidity trap" -- i.e., a situation where the two countries are simultaneously caught in liquidity traps. The notable features...

An important aspect of the globalization process is the increase in interdependence among countries through the deepening of trade linkages. This process should increase competition in each destination market and change the pricing behavior of firms. We present an extension of Dornbusch (1987)fs...

The cross-country examination of monetary policy transparency scores, economic size and supply slopes produces no clear patterns for the empirical relations in question. This evidence prompts us to formulate a general setup for the study of currency union stabilization when there is monetary...

International financial integration has greatly increased the scope for changes in a country's net foreign asset position through the "valuation channel" of external adjustment, namely capital gains and losses on the country's external assets and liabilities. We examine this valuation channel...

The paper provides an analytical approach to determine ex ante the optimal size (number ofparticipants) and the optimal monetary conditions (inflation rate) of a monetary union. In the first part, the case of homogenous members is presented from the »total economy point of view» put forward by...