International Finance and Macroeconomics

NBER Reporter, Spring 2008 | Go to article overview

International Finance and Macroeconomics


The NBER's Program on International Finance and Macroeconomics met in Cambridge on March 21. Roberto Chang, NBER and Rutgers University, and Menzie D. Chinn, NBER and University of Wisconsin, organized this program:

Charles Engel, University of Wisconsin and NBER, and Jian Wang, Federal Reserve Bank of Dallas, International Trade in Durable Goods: Understanding Volatility, Cyclicality, and Elasticities" (NBER Working Paper No. 13814)

Discussant: Paul Bergin, University. of California, Davis and NBER

Yu-chin Chen, University of Washington; Kenneth S. Rogoff, Harvard University and NBER; and Barabara Rossi, Duke University, Can Exchange Rates Forecast Commodity Prices. (NBER Working Paper No. 139011

Discussant: Jeffrey A. Frankel, Harvard University and NBER

A. Craig Burnside, Duke University and NBER; Martin S. Eichenbaum, Northwestern University and NBER; and Sergio Rebelo, Northwestern University and NBER, Understanding the Forward Premium Puzzle: A Microstructure Approach (NBER Working Paper No. 13278)

Discussant: Andrew K. Rose, University of California, Berkeley and NBER

Fabio Ghironi, Boston College and College, "The Domestic and International Effects of Financial Deregulation"

Discussant: Cedric Tille, University of Geneva

Maurice Obstfeld, University of California, Berkeley and NBER; Jay C. Shambaugh, Dartmouth College and NBER; and Alan M. Taylor, University of California, Davis and NBER, Financial Stability, the Trilemma, and International Reserves"

Discussant: Sebnem Kalemli-Ozcan, University of Houston and NBER

Laura Alfaro, Harvard University and NBER, and Fabio Kanczuk, University of Sao Paulo, "Optimal Reserve Management and Sovereign Debt" (NBER Working No. 13216)

Discussant: Vivian Yue, New York University

Data for OECD countries document that: 1) imports and exports are about three times as volatile as GDP; 2) imports and exports are pro-cyclical, and positively correlated with each other; and 3) net exports are counter-cyclical. Standard models fail to replicate the behavior of imports and exports, although they can match net exports relatively well. Inspired by the fact that a large fraction of international trade is in durable goods, Engel and Wang propose a two-country two-sector model, in which durable goods are traded across countries. Their model can match the business cycle statistics on the volatility and co-movement of the imports and exports relatively well. In addition, the model with trade in durables helps us to understand the empirical regularity noted in the trade literature: home and foreign goods are highly substitutable in the long run, but the short-run elasticity of substitution is low. The researchers note that durable consumption also has implications for the appropriate measures of consumption and prices to assess risk-sharing opportunities, as in the empirical work on the Backus-Smith puzzle. The fact that this model can match data better in multiple dimensions suggests that trade in durable goods may be an important element in open-economy macro models.

Chen and her co-authors demonstrate that "commodity currency" exchange rates have remarkably robust power in predicting future global commodity prices, both in-sample and out-of-sample. A critical clement of their in-sample approach is to allow for structural breaks, endemic to empirical exchange rate models, by implementing the approach of Rossi (2005b). Aside from its practical implications, their forecasting results provide perhaps the most convincing evidence to date that the exchange rate depends on the present value of identifiable exogenous fundamentals. They also find that the reverse relationship holds; that is, that commodity prices Granger-cause exchange rates. However, consistent with the vast post-Meese-Rogoff (1983a,b) literature on forecasting exchange rates, they find that the reverse forecasting regression does not survive out-of-sample testing.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

International Finance and Macroeconomics
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.