#2009-055A "Common Fluctuations in OECD Budget Balances"
by Christopher J. Neely, and David E. Rapach
October 2009

We analyze comovements in four measures of budget surpluses for 18 OECD countries for 1980–2008 with a dynamic latent factor model. More...

#2009-053A "Biofuel Subsidies: An Open-Economy Analysis"
by Subhayu Bandyopadhyay, Sumon Bhaumik, and Howard J. Wall
October 2009

We present a general equilibrium analysis of biofuel subsidies in an open-economy context. In the small-country case, when a Pigouvian tax on conventional fuels such as crude is in place, the optimal biofuel subsidy is zero. More...

#2009-041A "Cross-Border Lobbying in Preferential Trading Agreements: Implications for External Tariffs"
by Subhayu Bandyopadhyay, Sajal Lahiri, and Howard J. Wall
August 2009

This paper examines the effect of cross-border lobbying on domestic lobbying and on external tariffs in both Customs Union (CU) and Free Trade Area (FTA). More...

#2009-040A "Sources of Exchange Rate Fluctuations: Are They Real or Nominal?"
by Luciana Juvenal
August 2009

I analyze the role of real and monetary shocks on the exchange rate behavior using a structural vector autoregressive model of the US vis-à-vis the rest of the world. More...

#2009-039A "Incidence of an Outsourcing Tax on Intermediate Inputs"
by Subhayu Bandyopadhyay
August 2009

The paper uses a Hecksher-Ohlin-Samuelson type general equilibrium framework to consider the incidence of an outsourcing tax on an economy in which the production of a specific intermediate input has been fragmented and outsourced. More...

#2009-023B "What Spurs Terrorism in Developing Nations?"
by Subhayu Bandyopadhyay, and Javed Younas
May 2009
Revised September 2009

Understanding the causes of terrorism is important in predicting it and in developing an effective counterterrorism strategy. Data on the incidence of terrorist attacks and casualties suggest that domestic terrorism poses a substantially larger threat than transnational terrorism in developing countries. More...

#2009-021A "Foreign Aid as Counterterrorism Policy"
by Subhayu Bandyopadhyay, Todd Sandler, and Javed Younas
April 2009

We present a model where foreign aid bolsters proactive counterterrorism efforts of a foreign nation that is a source for transnational terrorism. More...

#2009-002A "Resolving the Unbiasedness Puzzle in the Foreign Exchange Market"
by Daniel L. Thornton
January 2009

An unresolved puzzle in the empirical foreign exchange literature is that tests of forward rate unbiasedness using the forward rate and forward premium equations yield markedly different conclusions about the unbiasedness of the forward exchange rate. More...

#2008-046B "Mexico’s Integration into NAFTA Markets: A View from Sectoral Real Exchange Rates"
by Rodolphe Blavy, and Luciana Juvenal
December 2008
Revised May 2009

Using a self-exciting threshold autoregressive model, we confirm the presence of nonlinearities in sectoral real exchange rate (SRER) dynamics across Mexico, Canada and the US in the pre-NAFTA and post-NAFTA periods. More...

PUBLISHED: Federal Reserve Bank of St. Louis Review, September/October 2009, 91(5, Part 1), pp. 441-64

#2008-042B "Do European Capital Flows Comove?"
by Silvio Contessi, and Pierangelo DePace
November 2008
Revised May 2009

We study the cross-section correlations of net, total, and disaggregated capital flows for the major source and recipient European Union countries. We seek evidence of changes in these correlations since the introduction of the euro to understand whether the European Union can be considered a unique entity with regard to its international capital flows. More...

FORTHCOMING: North American Journal of Economics and Finance