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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.

International

The response of multinationals’ foreign exchange rate exposure to macroeconomic news

We use intraday data to estimate the daily foreign exchange exposure of U.S. multinationals and show that macroeconomic news affects these firms’ foreign exchange exposure. News creates a substantial shift in the joint distribution of stock and exchange rate returns that has both a transitory and a persistent component.

Truncated Firm Productivity Distributions and Trade Margins

A standard theoretical prediction is that average exports are independent of tariff rates when the underlying distribution of firm productivities is assumed to be the widely-used Pareto distribution. Assuming that the underlying distribution has no upper bound is undoubtedly inaccurate and produces theoretical results at odds with empirical results.

Terms-of-Trade and Counterterrorism Externalities

This paper investigates the interplay of trade and terrorism externalities under free trade between a developed nation that exports a manufactured good to and imports a primary product from a developing nation. A terrorist organization targets both nations and reduces its attacks in response to a nation’s defensive counterterrorism efforts, while transferring some of its attacks abroad.

Financial Frictions and Export Dynamics in Large Devaluations

We study the role of financial frictions and balance-sheet effects in accounting for the dynamics of aggregate exports in large devaluations. We investigate a small open economy with heterogeneous firms, where firms face financing constraints and debt can be denominated in foreign units.

Systematic Cojumps, Market Component Portfolios and Scheduled Macroeconomic Announcements

This study provides evidence of common bivariate jumps (i.e., systematic cojumps) between the market index and style-sorted portfolios.

Capital Goods Trade, Relative Prices, and Economic Development

International trade in capital goods has quantitatively important effects on economic development through capital formation and aggregate TFP.

Capital Accumulation and Dynamic Gains from Trade

We compute welfare gains from trade in a dynamic, multicountry model with capital accumulation. We examine transition paths for 93 countries following a permanent, uniform, unanticipated trade liberalization.

International Trade and Intertemporal Substitution

This paper studies the role of international trade delivery lags and variation in the intertemporal marginal rate of substitution in accounting for puzzling features of cyclical fluctuations of international trade volumes.

The Effects of Terror on International Air Passenger Transport: An Empirical Investigation

This paper presents a theoretical model (adapted from the structural gravity model by Anderson and van Wincoop, 2003) to capture the effects of terrorism on air passenger traffic between nations affected by terrorism.

Chinese Foreign Exchange Reserves, Policy Choices and the U.S. Economy

China is both a major trading partner of the United States and the largest official holder of U.S. assets in the world.

Markets, Externalities, and the Dynamic Gains of Openness

Inflows 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.

Offshoring in Developing Countries: Labor Market Outcomes, Welfare, and Policy

Does a reduction in offshoring cost benefit workers in the world's factories in developing countries? Using a parsimonious two-country model of offshoring we find very nuanced results.

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 domestic and transnational terrorism.

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 moments of asset prices and exchange rates imply that pricing kernels have to be almost perfectly correlated across countries.

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: General Equilibrium Analysis of the China Trade Shock

We develop a dynamic trade model with spatially distinct labor markets facing varying exposure to international trade. The model captures the role of labor mobility frictions, goods mobility frictions, geographic factors, and input-output linkages in determining equilibrium allocations.

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

After World War II, international capital flowed into slow-growing Latin America rather than fast-growing Asia. This is surprising as, everything else equal, fast growth should imply high capital returns.


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