Fiscal policy within common currency areas
A study was conducted to examine the relationships between fiscal policy and currency unions. The study focuses on spillover effects, budget discipline and deficit incentives. Results show that currency unions should not neglect the impact of fiscal policies on the exchange rate mechanism. In addition, mechanisms for directing fiscal transfers and fiscal policy coordination are vital to establish policy discipline and minimize undesirable regional effects.
Publication Name: Journal of Common Market Studies
The purchasing power parity debate
Purchasing power parity (PPP), a disarmingly simple theory, holds that the nominal exchange rate between two currencies should be equal to the ratio of aggregate price levels between the two currencies. Theoretical works suggested that the PPP theory of exchange rates should be linked to relative changes in price levels with deviations that might be only minimal or momentary while the empirical work could find only the flimsiest evidence in support of PPP.
Publication Name: Journal of Economic Perspectives
Savings-investment correlations: transitory versus permanent
Research on regression estimations of investment shares on savings shares has yielded assumptions on domestic and foreign fiscal activity. Transitory savings movements are likely to cause investment to remain localized, due to potential difficulties with international transactions, evaluating foreign investment opportunities and mitigating exchange controls. Savings increases perceived to be permanent are likely to shift investment abroad.
Publication Name: Manchester School
- Abstracts: Deviations from purchasing power parity and capital flows. Animal spirits, investment and international capital movements
- Abstracts: The role of a fixed exchange rate system when central bankers are independent
- Abstracts: Optimal policy with limited commitment. Linear aggregation in cointegrated systems. A solution to the positivity problem in the state-space approach to modeling vector-valued time series
- Abstracts: Precautionary saving and the Laursen-Metzler effect. Estimating saving-investment correlations: evidence for OECD countries based on an error correction model
- Abstracts: The skill and higher educational content of UK net exports. Vacancy durations: search or selection? The relations between unemployment benefits, the reservation wage and search duration