The real exchange rate (RER) misalignment is a key variable in academic and policy circles. Among policy circles, sustained RER overvaluations are observed by authorities for future exchange rate adjustments. Some countries, on the other hand, have pursued very active exchange rate policies in order to undervalue their currencies to foster growth through export promotion (e.g. China). Our goal ...

ONE OF THE MAIN PUZZLES in international finance is portfolio home bias: typical investors hold most of their wealth in domestic assets (despite the fact that international diversification permits a sizable reduction in risk). Serrat (2001) claims that the nontradable nature of many consumption goods explains home bias. He presents a model of a world with two countries that receive tradable and...

In the global economy, crude oil is among the most important strategic goods that affects the performance of local and international markets. Prediction of the oil price has always been an important challenging topic in the global economy and producers and consumers have constantly been trying to improve their roll in the oil price changes and for many years OPEC has been one of the key players...

Abstract We use detailed data for Iceland to examine two often-neglected aspects of the exchange rate pass-through problem. First, we investigate whether coefficient varies with degree international tradability goods. Second, analyze if depends on monetary policy framework. consider 12 disaggregated price indexes in 2003–2019, a period that includes Iceland’s banking and currency crisis 2008. f...

We econometrically estimate the effect of transaction costs on the cost-effectiveness of the tradable permit market created during the US lead phasedown. We develop a methodology to identify transaction costs in the absence of price data. We find that refineries generally trade efficiently. We also, however, find evidence that transaction costs affect trading. We find evidence that refineries a...

Interest rate shocks have a large impact on economic activities in emerging markets. This paper argues that this finding can be associated with credit market imperfections affecting principally non-tradable activities. Using a new database on sectoral output and credit markets in emerging economies, I present novel evidence documenting that tradable and non-tradable sectors respond asymmetrical...

The paper analyses the price convergence in the Czech Republic and other Central and Eastern European (CEE) countries towards the European Union (EU). Cross-country comparisons based on the International Comparison Project (ICP) 1999 are used. The authors conclude that in a benchmark convergence scenario, the equilibrium real exchange rate appreciation of the Czech koruna (CZK) should reach rou...

Reduced trade barriers and lower costs of transportation and information have meant that a growing part of the economy has been exposed to international trade. In particular, this is the case in the service sector. We divide the service sector into a tradable and a non-tradable part using an approach to identify tradable industries utilizing a measure of regional concentration of production. We...