The role of China in global external imbalances: Some further evidence

The large imbalances in the current account positions of the US and the Asian economies are seen by most scholars as the main threat to an orderly development of the global economy. While the opinions on the most likely evolution of these imbalances and on their sustainability do differ across observers, ranging from catastrophic to rather optimistic views, almost all agree that some adjustment will have to take place in the near future, and that this adjustment will involve, among other things, a rebalancing of saving and demand across the globe. As an outcome of this process, China shall increasingly supplement the US in the role of engine of global economic growth.Using a global macroeconometric model, we examine the impact on this adjustment process of a number of shocks originating in the Chinese economy, including an expansionary fiscal shock, a revaluation of the renmimbi, and an expansion of internal demand following an acceleration in the process of rural–urban migration. The analysis focuses on two related points: how will these shocks affect the medium-run evolution of transpacific imbalances, and what will their impact be on global economic growth. The simulations allow us to track the impact of these shocks on the different poles of the world economy, and to assess their relative contribution to the task of reducing global imbalances without interrupting global economic growth.     

The Dutch disease: The Canadian evidence

Zusammenfassung Die ⋯holl?ndische Krankheit”: Der kanadische Befund. — Der Autor betrachtet detailliert das Ausma\ der sektoralen Verschiebungen und untersucht die strukturellen Anpassungsprozesse in der kanadischen Volkswirtschaft. Er zeigt, da\ das Wachstumsmuster nicht nur zwischen den Sektoren asymmetrisch ist, sondern auch zwischen zwei Phasen des Konjunkturzyklus. Dementsprechend scheint der Strukturwandel einem zyklischen Pfad gefolgt zu sein. Diese Hypothese wird empirisch getestet unter Verwendung von Vierteljahresdaten aus der Zeit zwischen 1962 und 1983. Eine disaggregierte Analyse der Lohnentwicklung zeigt eine ?hnliche Asymmetrie. Dies wird zum gro\en Teil auf die Rohstofflastigkeit der kanadischen Wirtschaft zurückgeführt. In einem verallgemeinerten Rahmen für die ⋯holl?ndische Krankheit” l?\t sich daraus entnehmen, da\ die Rohstofflastigkeit zum strukturellen Wandel beigetragen und auch die zyklischen Charakteristika bestimmt hat.

---

Résumé La maladie néerlandaise: l’évidence canadienne. — Cette étude jette un coup d’oeuil sur la dimension des déplacements sectoriels et examine le processus d’ajustement structurel dans l’économie canadienne. Il est constaté que la croissance se développe d’une manière asymétrique en ce qui concerne les secteurs et les deux phases consécutives du cycle conjoncturel. Pour cette raison le changement structurel semble avoir suivi une voie cyclique. Cette hypothèse est examinée par un test empirique en utilisant des dates trimestrielles pendant la période 1962–83. Une analyse désagrégée du développement des salaires démontre une asymétrie similaire. Ce fait est largement attribué au caractère de l’économie canadienne basée sur des ressources naturelles. Dans un cadre généralisé de la maladie néerlandaise cela peut être expliqué d’avoir contribué au changement structurel et aussi d’avoir déterminé le caractère cyclique.

---

Resumen La enfermedad holandesa: evidencia para el Canadá. — En este trabajo se analiza detalladamente la magnitud de cambios sectoriales y se examina la naturaleza del proceso de ajuste estructural de la economía canadiense. Se encuentra que además de ser asimétrica entre los sectores, la pauta de crecimiento también es asimétrica entre dos fases del ciclo económico. Por ello, el cambio estructural parece haber seguido una trayectoria c?clica. Esto se estudia emp?ricamente utilizando datos trimestrales correspondientes al período 1962-1983. El análisis desagregado del comportamiento salarial muestra una asimetría similar. Esto es atribuído en gran parte a la importancia de los recursos naturales para la economia canadiense. En el marco generalizado de la enfermedad holandesa esto puede haber contribuído al cambio estructural y a determinar sus características cíclicas.

     

Determinants of external imbalances: The role of taxes, government spending, and productivity

This paper develops and estimates a dynamic optimizing model of the current account. The model focuses on real factors that determine the evolution of saving and investment and hence the external balance. Three types of shocks are at the center of the analysis: productivity shocks, shocks to labor input, and tax policy shocks. While our approach is in line with the real business cycle models of the current account, the distinguishing feature of the work is the application of econometric methods to time series data for a small open economy so as to directly estimate the parameters governing saving and investment under rational expectations restrictions.     

South-East Asian export performance: external market access and internal supply capacity

This paper investigates the determinants of divergent export performance across countries and regions, focusing in particular on South-East Asia. We begin with a general decomposition of export growth into the contributions of increased external demand (foreign market access) and improvements in internal supply-side conditions (supply capacity). Foreign market access growth is shown to make a substantial contribution to explaining divergent export performance and to be highly geographically concentrated. Building on the results of the decomposition, we move on to an econometric analysis of the determinants of export performance, where we find important roles for external geography, internal geography and institutional quality. J. Japanese Int. Economies 17 (4) (2003) 404–431.     

Determinants of FDI-induced externalities: New empirical evidence for Mexican manufacturing industries

This paper presents new statistical evidence on foreign direct investment (FDI)-induced externalities in Mexican manufacturing industries for 1993. The new empirical results are important in three respects. First, the size of technological differences between FDI and Mexican firms is positively related to positive externalities, indicating the importance of sufficient scope of potential externalities, incentives to make externality-facilitating investments and the absence of negative competition effects. Second, geographical concentration is identified as a structural determinant of positive FDI externalities. Finally, the effect from FDI cleared from the influence of technological differences and agglomeration is the creation of positive externalities, especially when endogeneity of the foreign participation variable is controlled for.     

Predicting recessions: Some evidence for Germany

Predicting Recessions: Some Evidence for Germany. - This paper assesses the information content and performance of selected series as indicators and predictors of recessions in Germany. The series are a composite leading indicator, a business confidence measure, and seven financial variables. The estimation of in- and out-of-sample probabilities of recessions based on probit analyses indicates that in the past the yield spread has been the most promising indicator, with a lead time to recession of around four quarters. However, the performance of the yield spread may be reduced in the future if yield spreads are more influenced by international rather than domestic factors.     

Determinants of exchange-rate regimes for currencies of developing countries: Some preliminary results

The breakdown of the Bretton Woods system gave the LDCs an opportunity to move away from exchange-rate regimes based on pegging to a single currency. Relatively few chose to do so, thus providing some evidence that, from their point of view, the recognized advantages of more flexible exchange-rate arrangements are more than outweighed by the recognized drawbacks.The aim of this article is to set up a suitable econometric model and use it for a preliminary assessment of the quantitative significance of various factors affecting the choice of exchange-rate regimes by the LDCs.     

Tracking the causes of eurozone external imbalances: new evidence and some policy implications

The paper assesses the contribution of key drivers of external imbalances in the Eurozone through the estimation of a panel-data Vector Autoregressive model over 1975–2011. Growth fluctuations, initially associated with demand booms triggered by unusually low interest rates, and later with demand contractions resulting from the crisis and policy adjustments, have played an important role in current account balance fluctuations. Changes in real exchange rates or unit labor costs have played a less important role. Demand shocks have contributed more to current account balance dynamics in the Eurozone periphery than in the core, whereas competitiveness has been a less prominent factor in the periphery but relatively more important in the core. Some broad policy implications of the findings for demand management in a currency union are discussed, including for fiscal policy coordination and macroprudential policies when union members face asymmetric shocks. The role of internal devaluation policies as a means of correcting external imbalances is also reassessed.     

Monetary policy reaction functions and saving-investment correlations: Some cross-country evidence

Zusammenfassung Reaktionsfunktionen für die Geldpolitik und Korrelationen zwischen Ersparnis und Investitionen: Evidenz aus einer Querschnittsuntersuchung. — In diesem Artikel wird untersucht, wie stark die Geldpolitik auf Ver?nderungen in der Handelsbilanz reagiert. Verschiedene Sch?tzungen der linearen Reaktionsfunktionen mit Quartalsdaten für Deutschland, Italien, Japan und die USA zeigen, da\ in allen L?ndern mit Ausnahme der USA ein Defizit in der Handelsbilanz zu einer restriktiven Geldpolitik führt. Ein spezielles Sch?tzverfahren erlaubt den Schlu\, da\ die Reaktionsfunktionen nicht-linear sind, soweit es sich um die Handelsbilanzvariable handelt. Auch zeigt sich, da\ die Geldpolitik st?rker auf Defizite als auf überschüsse reagiert. Sobald Asymmetrie zugelassen wird, verbessern sich die Reaktionsfunktionen und die Parametersch?tzungen werden pr?ziser.

---

Résumé Les fonctions de la réaction de la politique monétaire et les correlations entre épargne et investissements: quelque évidence d’une étude de plusieurs pays. — Dans cet article les auteurs examinent le degré avec lequel la politique monétaire a réagi à la balance courante. L’OMC, robustes et paramètres-variables estimations des fonctions de réaction linéaires avec des données trimestrielles de l’Allemagne, l’Italie, du Japon et des Etats Unis proposent pour les pays sauf les Etats Unis que le déficit de la balance courante mène à une politique monétaire restrictive. Les résultats d’une estimation spécifique indiquent que les fonctions de réaction sont non-linéaires aux termes de la variable pour la balance courante. La politique monétaire réagit plus fortement aux déficits qu’aux surplus. En outre, l’admission de l’asymétrie améliore la performance des fonctions de réaction et produit des paramètres estimés plus précis.

---

Resumen Funciones de reacción de politica monetaria y correlaciones entre ahorro e inversión: alguna evidencia para una muestra de países. — En este trabajo se examina el grade en el cual la politica monetaria ha reaccionado a la cuenta corriente. Estimaciones MCC y de parametres robustos y variables de las funciones lineares de reacción con datos trimestrales de Alemania, Italia, Japon y de los Estados Unidos sugieren — los Estados Unidos siendo la excepción — que, ceteris paribus, el déficit de cuenta corriente resulta en una oferta monetaria restrictiva. Los valores criticos de la estimación (threshold estimation) indican que las funciones de reacción son no lineares en cuanto a la variable de la cuenta corriente, y que la política monetaria reacciona más a los déficits que a los superávits. Además, al incorporar la asimetricidad se mejora la performance de las funciones de reacción y se las estimaciones de los parámetros resultan más precisas.