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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.


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

How efficiently are physical and human capital allocated across countries? Observing differences in the countries' ratios of physical and human capital to output is not conclusive evidence of distortions since those differences may be driven by factor intensity differences in the countries' production functions.

Natural Resources and Global Misallocation

We explore the efficiency in the allocation of physical capital and human capital across 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

We investigate the role of jumps in transmitting volatility between foreign exchange markets (Engle, Ito, and Lin, 1990; Melvin and Peiers Melvin, 2003; Cai, Howorka, and Wongswan, 2008).

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

It is a robust finding that technical trading rules applied to foreign exchange markets have earned substantial excess returns over long periods of time. However, the approach to risk adjustment has typically been rather cursory, and has tended to focus on the CAPM.

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.

Illegal Immigration and Fiscal Competition

Reflecting recent enforcement policy activism of US states, this paper examines federal- state overlap of illegal immigration policy in a spatial context.

Capital Goods Trade and Economic Development

Almost 80 percent of capital goods production in the world is concentrated in 10 countries. Poor countries import most of their capital goods.

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.

Financing Growth: Foreign Aid vs. Foreign Loans

Compared to foreign grants, do concessional loans from foreign governments and/or unsubsidized loans from foreign private banks lead to faster growth in developing nations?

The Quantitative Importance of Openness in Development

This paper deals with a classic development question: how can the process of economic development – transition from stagnation in a traditional technology to industrialization and prosperity with a modern technology – be accelerated?

Which continuous-time model is most appropriate for exchange rates?

This paper evaluates the most appropriate ways to model diffusion and jump features of high-frequency exchange rates in the presence of intraday periodicity in volatility. We show that periodic volatility distorts the size and power of conventional tests of Brownian motion, jumps and (in)finite activity.

Export Market Diversification and Productivity Improvements: Theory and Evidence From Argentinean Firms

This paper examines the relationship between trade and investment in technology adoption when firms face demand uncertainty.

Regionalization vs. Globalization

Both global and regional economic linkages have strengthened substantially over the past quarter century. We employ a dynamic factor model to analyze the implications of these linkages for the evolution of global and regional business cycles.

Lobbying for a Common External Tariff from Inside and Out

We consider the interactions between domestic lobbying and two types of cross-border lobbying in a Customs Union (CU). The two types of cross-border lobbying are (i) lobbying from firms in one CU country to the governments of other CU countries, and (ii) that from firms outside the CU.

Foreign Firms and the Diffusion of Knowledge

This paper constructs a model to examine the impact of foreign firms on a developing Country’s own accumulation of entrepreneurial knowledge.

What Do We Know about the Relationship between Access to Finance and International Trade?

The recent financial crisis has focused attention on the relationship between access to finance and international trade, triggering a burgeoning segment of the literature evaluating this link empirically.

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