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Working Paper Archives

Federal Reserve Bank of St. Louis working papers are preliminary materials circulated to stimulate discussion and critial comment.


Markets, Externalities, and the Dynamic Gains of Openness

Infl‡ows of foreign knowledge are the key for developing countries to catch up with the world technology frontier.

A Survey of the Empirical Literature on U.S. Unconventional Monetary Policy

This paper reviews and critically evaluates the empirical literature on the effects of U.S. unconventional monetary policy on both financial markets and the real economy. In order to understand how such policies could work, we also briefly review the literature on the theory of such policies.

Openness and the Optimal Taxation of Foreign Know-How

Developing countries frequently offer tax incentives and even subsidize the entry and operation of foreign firms. I examine the optimality of such policies in an economy where growth is driven by entrepreneurial know-how, a skill that is continuously updated on the basis of the productive ideas implemented in the country.

Disentangling the Wage Impacts of Offshoring On a Developing Country: Theory and Policy

The various channels through which a reduction in the cost of offshoring can improve wages in a developed country are by now well understood.

Estimating Border Effects: The Impact of Spatial Aggregation

Trade data are typically reported at the level of regions or countries and are therefore aggregates across space. In this paper, we investigate the sensitivity of standard gravity estimation to spatial aggregation.

Measuring Openness to Trade

In this paper we derive a new measure of openness—trade potential index—that quantifies the potential gains from trade as a simple function of data.

Terrorism, Trade and Welfare: Some Paradoxes and a Policy Conundrum

We present a standard trade model and show that terrorism can be trade inducing, starting from autarky.

Trade and Terrorism: A Disaggregated Approach

This paper constructs a model of trade consequences of terrorism, where firms in trading nations face different costs arising from two distinct types of terrorist risks – domestic and transnational.

International R&D Spillovers and Asset Prices

We provide new empirical evidence of a relationship between asset prices and trade- Induced international R&D spillovers; in particular, we find that pairs of countries that share more research and development exhibit more highly correlated stock market returns and less volatile exchange rates.

Why Are Exchange Rates So Smooth? A Segmented Asset Markets Explanation

Empirical work on asset prices suggests that pricing kernels have to be almost perfectly correlated across countries. If they are not, real exchange rates are too smooth to be consistent with high Sharpe ratios in asset markets.

Natural Resources and Global Misallocation

Are production factors allocated efficiently across countries? To differentiate misallocation from factor intensity differences, we construct a new dataset of estimates for the output shares of natural resources for a large panel of countries.

Trade and Labor Market Dynamics

We develop a dynamic trade model where production and consumption take place in spatially distinct labor markets with varying exposure to domestic and international trade.

The Experience of the RePEc Plagiarism Committee in Economics

RePEc is an open bibliography project driven entirely by volunteers and without a budget.

Explaining Educational Attainment across Countries and over Time

Consider the following facts. In 1950, the richest countries attained an average of 8 years of schooling whereas the poorest countries 1.3 years, a large 6-fold difference. By 2005, the difference in schooling declined to 2-fold because schooling increased faster in poor than in rich countries.

Reaction Functions in a Small Open Economy: What Role for Non-traded Inflation?

I develop a structural general equilibrium model and estimate it for New Zealand using Bayesian techniques.

The Trade Comovement Puzzle and the Margins of International Trade

Countries that trade more with each other tend to have more correlated business cycles. Yet, traditional international business cycle models predict a much weaker link between trade and business cycle comovement.

Innovation, Diffusion, and Trade: Theory and Measurement

I develop a multicountry-model in which economic growth is driven mainly by domestic innovation and the adoption of foreign technologies embodied in traded intermediate goods.

The Gravity of Experience

In this paper, we establish the importance of experience in international trade for reducing trade costs and facilitating bilateral trade.

Education Policies and Structural Transformation

This article studies the impact of education and fertility in structural transformation and growth.

Bad Investments and Missed Opportunities? Capital Flows to Asia and Latin America, 1950-2007

Since 1950, the economies of East Asia grew rapidly but received little international capital, while Latin America received considerable international capital even as their economies stagnated.

Endogenous Borrowing Constraints and Stagnation in Latin America

Latin America has had striking changes in economic performance over time. Following the recession and debt crises of the early 1980’s, consumption declined for about ten years and consumption per-capita in the year 2004 was roughly the same as it was in 1980.

Interjurisdictional Competition and Location Decisions of Firms

We examine the welfare properties of alternative regimes of interjurisdictional competition for heterogenous mobile firms.

The Role of Jumps in Volatility Spillovers in Foreign Exchange Markets: Meteor Shower and Heat Waves Revisited

This paper extends the previous literature on geographic (heat waves) and intertemporal (meteor showers) foreign exchange volatility transmission to characterize the role of jumps and cross-rate propagation.

Can Risk Explain the Profitability of Technical Trading in Currency Markets?

Academic studies show that technical trading rules would have earned substantial excess returns over long periods in foreign exchange markets. However, the approach to risk adjustment has typically been rather cursory.

Sovereign Default and Maturity Choice

This paper presents a new quantitative model of endogenous sovereign default, maturity choice, and the term structure of bond yield spreads.

Unauthorized Immigration and Fiscal Competition

Reflecting upon recent enforcement policy activism of US states and countries within the EU towards unauthorized workers, we examine the overlap of centralized (federal) and decentralized (state or regional) enforcement of immigration policies in a spatial context.

Capital Goods Trade and Economic Development

We argue that international trade in capital goods has quantitatively important effects on economic development through two channels: (i) capital formation and (ii) aggregate TFP.

Determinants of Trade Margins: Insights Using State Export Data

We adapt the heterogeneous firm trade models of Helpman, Melitz, and Rubinstein (2008) and Lawless (2010) to analyze extensive and intensive trade margins using state-level exports to foreign nations.

Risk Aversion at the Country Level

In this paper the authors estimate the coefficient of relative risk aversion for 75 countries using data on self-reports of personal well-being from the Gallup World Poll.

Price Equalization, Trade Flows, and Barriers to Trade

In this paper we show that price equalization does not imply zero barriers to trade. There are many barrier combinations that deliver price equalization, but each combination implies a different volume of trade.

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