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on Open Economy Macroeconomic |
| By: | Hohberger, Stefan; Herz, Bernhard |
| Abstract: | The paper examines the stabilizing properties of fiscal policy for current account imbalances under alternative exchange rate regimes. Using a small open economy DSGE model with fiscal feedback rules, we investigate the dynamic responses of different shocks to macroeconomic variables and their implication for the current account. Our results imply that a fiscal response to the current account improves the stabilizing effect of most macroeconomic variables compared to a countercyclical response to output. The loss of national monetary policy when entering into a monetary union leads to higher variability and more persistence of the real exchange rate and the current account. Despite the stabilizing properties, fiscal policy intervention induces higher variability of output in the short-run and therefore faces a trade-off between stabilizing the external position and output -- |
| JEL: | E62 F41 E61 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc12:66054&r=opm |
| By: | Schilirò, Daniele; Carfì, David |
| Abstract: | The paper proposes a model of coopetitive-game (of normal-form type) and devote it to Greek crisis, conceiving this model at a macro level, with the aim of rebalancing the current account of Greece. The authors construct the game trying to represent feasible scenarios of the strategic interaction between Greece and Germany. They suggest - after a deep study of their sample - feasible transferable utility solutions, in a properly coopetitive perspective, for the divergent interests of Greece and Germany. |
| Keywords: | Coopetition; Greek crisis; current account rebalancing; cooperation; |
| JEL: | F42 C78 C71 F41 O52 C72 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:43578&r=opm |
| By: | Kolev, Galina |
| Abstract: | In 1976 Vaubel suggested using the variation of real exchange rates when evaluating the desirability of a monetary union within a group of currencies (Vaubel 1976). Currency uni cation is less desirable, the more often real exchange rate adjustments are needed. Ten years later, Mussa reconsidered the high correlation between nominal and real exchange rate movements and presumed predominant influence of transitory factors on the development of real exchange rates (Mussa 1986). The implementation of the real exchange rate criterion for the viability of countries to form a monetary union a ords therefore to isolate the real exchange rate variation which is not caused by short-lived shocks to nominal exchange rates. Using the methodology introduced by Blanchard and Quah (1989), the present analysis examines the contribution of temporary and permanent shocks to the variation of real and nominal exchange rates among European countries. Imposing the restriction that temporary shocks should not a ect the real exchange rate in the long run, the analysis indicates that in most of the EU-15 countries the nominal exchange rate exibility has been used as a means to ful ll real exchange rate adjustments before 1999. Based on the results the most viable monetary union should be between Germany, Luxembourg, and France. Futher on, the empirical analysis applies the real exchange rate criterion to the Eastern enlargement of EMU and shows that giving up the nominal exchange rate exibility will be the most painful for Hungary and Poland. -- |
| JEL: | F41 F33 F15 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc12:66061&r=opm |
| By: | Hevia, Constantino; Loayza, Norman |
| Abstract: | In the aftermath of its long-standing civil war, Sri Lanka is keen to reap the social and economic benefits of peace. Even in the middle of civil conflict, the country was able to grow at rates that surpassed those of its neighbors and most developing countries. It is argued, then, that the peace dividend may bring about even higher rates of economic growth. Is this possible? And if so, under what conditions? To be sure, Sri Lanka's high growth rate in the past three decades did not come for free. It took an increasing effort of resource mobilization in the country, with a rise in national saving from 15 percent of gross domestic product in the mid-1970s to 25 percent in 2010. This rise in national saving was fundamentally fueled and sustained by the private sector. In the future, however, the private saving rate is likely to decline because the demographic transition experienced in the country is bound to produce higher old dependency rates in the next two decades. However, the public sector has much room for reducing its deficits and increasing public investment. Similarly, external investors are likely to encounter attractive and profitable investment projects in the coming years in a reformed and peaceful environment. The government of Sri Lank has two goals regarding these issues. First, increasing public saving to 1.5 percent of gross domestic product by 2013; and second, increasing international investment in the country by letting the current account deficit increase to 4-5 percent of gross domestic product in the coming years. If these goals are achieved, what can be expected for growth of gross domestic product in the country? To answer this question, this paper presents a neoclassical growth model with endogenous private saving, calibrates it to fit the Sri Lankan economy, and simulates the behavior of growth rates of gross domestic product and related variables under different scenarios. In what the authors call the Reform Scenario, total factor productivity would increase from 1 to 1.75 percent per year. This would produce a gross domestic product growth rate of about 6.5 percent in the next 5 years, 4.6 percent by 2020, and 3.5 percent by 2030, the end of the simulation period. This robust growth performance would be supported at the beginning mostly by capital accumulation but later on mainly by productivity improvements. |
| Keywords: | Economic Growth,Emerging Markets,Access to Finance,Economic Theory&Research,Achieving Shared Growth |
| Date: | 2013–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6300&r=opm |