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The role of consumption substitutability in the international transmission of monetary shocks

Article Abstract:

This paper develops a general framework to analyze the impact of monetary shocks in an open economy, focusing on the role of the degree of substitutability between goods produced in different countries. We extend the contributions by Obstfeld and Rogoff [Obstfeld, M., Rogoff, K., 1995. Exchange rate dynamics redux. Journal of Political Economy 103, 624-659] and Corsetti and Pesenti [Corsetti, G., Pesenti, P., 1997. Welfare and Macroeconomic Interdependence, NBER Working Paper 6703] to show that the welfare impact differs across countries when the degree of substitutability between goods produced in different countries is different from the degree of substitutability between goods produced in the same country. A shock that would be beneficial in a closed economy can have an adverse `beggar-thyself effect in the country where it takes place, or an adverse `beggar-thy-neighbor' effect on its neighbor. [C] 2001 Elsevier Science B.V. All rights reserved. Keywords: Marshall-Lerner-Robinson condition; Beggar-thy-neighbor JEL classification: F41; F42

Author: Tille, Cedric
Publisher: Elsevier Science Publishers
Publication Name: Journal of International Economics
Subject: Economics
ISSN: 0022-1996
Year: 2001

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The equilibrium ownership of an international oligopoly

Article Abstract:

Mergers and acquisitions (M&A) is the dominant form of Foreign Direct Investment (FDI), but has only received scarce attention in the theory literature on trade and investment. This paper highlights how the international pattern of ownership of productive assets may depend on features of trade and production cost. It suggests how high trade costs may be conductive to national ownership of assets, while international firms may arise at lower trade costs, contrary to what the `tariff jumping' argument would suggest. It is also shown how private and social incentives for M&A may differ for weak merger synergies, but converge when synergies are stronger. [C] 2001 Elsevier Science B.V. All rights reserved. Keywords: International mergers; Endogenous market structure; Tariff jumping FDI JEL classification: F23; L13

Author: Horn, Henrik, Persson, Lars
Publisher: Elsevier Science Publishers
Publication Name: Journal of International Economics
Subject: Economics
ISSN: 0022-1996
Year: 2001

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Nominal exchange rates and monetary fundamentals Evidence from a small post-Bretton woods panel

Article Abstract:

We study the long-run relationship between nominal exchange rates and monetary Fundamentals in a quarterly panel of 19 countries extending from 1973.1 to 1997.1. Our analysis is centered on two issues. First, we test whether exchange rates are cointegrated with long-run determinants predicted by economic theory. These results generally support the hypothesis of cointegration. The second issue is to re-examine the ability for monetary fundamentals to forecast future exchange rate returns. Panel regression estimates and panel-based forecasts confirm that this forecasting power is significant. [C] 2001 Elsevier Science B.V. All rights reserved. Keywords: Exchange rates; Panel cointegration; Prediction JEL classification: F31; F47

Author: Mark, Nelson C., Sul, Donggyu
Publisher: Elsevier Science Publishers
Publication Name: Journal of International Economics
Subject: Economics
ISSN: 0022-1996
Year: 2001

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Subjects list: Research, United States, Economics, Economic research
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