The COVID-19 pandemic is creating uncertainty that potentially causes a decline in global trade. It hampers the catching-up processes of developing countries because they are already connected through global value chains (GVCs). This study investigates the speed of convergence in GVC...

India is becoming a key player in the global economy. It performs well in exporting information and technology services, pharmaceuticals and petroleum products. India’s large diaspora is well integrated abroad, helping to develop new export markets and facilitate the transfer of technology and...

Using panel data on military spending for 125 countries, we document new facts about the effects of changes in government purchases on the real exchange rate, consumption, and current accounts in both advanced and developing countries. While an increase in government purchases causes real...

This paper examines the mechanisms through which government spending affects the dynamics of the real exchange rate. Using a two-sector dependent open economy model with intersectoral mobility costs for private capital, we show that public investment generates a (i) non-monotonic U-shaped...

We suggest it may be quot;too easyquot; to attribute real exchange rate movements to law of one price deviations. We show that it is immaterial whether one uses seemingly traded goods, nontraded goods, or even just a single, unimportant consumer good, say beer. The ease of attributing the...

Emerging Market economies have experienced periods of gradual and persistent appreciation in the real exchange rate, persistent current account deficits alongside high levels of foreign investment flows in an expansion phase followed by a contractionary phase of a sharp downward correction in...