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Full-Text Articles in International Economics
Trade Margins And Exchange Rate Regimes: Evidence From A Panel Varx, Lilia Cavallari, Stefano Daddona
Trade Margins And Exchange Rate Regimes: Evidence From A Panel Varx, Lilia Cavallari, Stefano Daddona
Lilia Cavallari
This paper studies output and trade margin dynamics in the aftermath of external shocks in fixed and floating exchange rate regimes. Using a panel VARX model, it traces the mean responses of output, terms of trade, extensive and intensive margins to real and nominal shocks in 22 developed economies over the period 1988-2011. It clarifies the role of trade margins for the transmission of shocks. A business cycle expansion abroad implies positive output spillovers through the trade channel in any exchange rate regime. Yet in the sample of peggers, there is a switch from trade of previously traded goods towards …
Firms' Entry, Monetary Policy And The International Business Cycle, Lilia Cavallari
Firms' Entry, Monetary Policy And The International Business Cycle, Lilia Cavallari
Lilia Cavallari
This paper proposes a two-country monetary model with firm entry as a means for alleviating the comovement puzzles in international business cycle models. It shows that business formation can generate fluctuations in output, employment, investment and trade flows close to those in the data while at the same time providing positive international comovements. Simulations show that the presence of imported investment goods is essential for replicating these facts. Keywords: firm entry, international business cycle, international comovements, comovement puzzles, Taylor rule, firm markups. JEL codes: E31; E32; E52