Although initially originated as a totally empirical relationship to explain the volume of trade between two partners, gravity equation has been the focus of several theoretic models that try to explain it. Specialization models are of great importance in providing a solid theoretic ground for gravity equation in bilateral trade. Some research papers try to improve specialization models by addi...

We con...rm the presence of substantial non-linearities in real exchange rate dynamics at the sectoral level. There exists zones where arbitrage is not pro...table because of transaction costs, and thus mean reversion is inexistent. We compute the speed of mean reversion of sector speci...c real exchange rates, conditional on the existence of arbitrage as implied by our non-linear estimations, ...

_________________________________________________________________________ We develop a simple, multicountry, multisector intertemporal general equilibrium model in which the degree of tradability of output differs across sectors. Tradability is determined both by the degree of substitutability in consumption between units of the same good produced in different countries and by the transactions ...

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...

Long-run cross-country price data exhibit a puzzle. Today, richer countries exhibit higher price levels than poorer countries, a stylized fact usually attributed to the “BalassaSamuelson” effect. But looking back fifty years, or more, this effect virtually disappears from the data. What is often assumed to be a universal property is actually quite specific to recent times. What might explain th...

In this paper, we use a unique dataset on the distribution of output and demand across regions of the United States to estimate trade costs for 969 service and manufacturing industries. Our estimation method is a natural extension of the gravity model of trade and identifies trade costs in the absence of trade data. The estimated trade costs are higher on average for service industries, but the...

Abstract My comment on Weber and Staples (Digit Financ, https://doi.org/10.1007/s42521-022-00064-8 , 2022) elaborates an economic perspective of their “programmable money” proposal. While claims issued tendered for goods services resemble money, a number issues must be resolved before this innovation is feasible as money in analog trade or digital finance. These include secondary tradability, p...