Liability dollarization of the domestic banking system represents a source of vulnerability for emerging market countries. The root cause is a lack of faith in the domestic currency, which ultimately stems from the belief that the government will not follow policies that promote longrun currency stability. This paper presents a model in which government myopia determines the unofficial dollariz...

This paper explores the role of exchange rate regimes in explaining deviations from the classic theory of purchasing power parity. Examining a broad panel of countries, I find that developing countries with fixed exchange rate regimes have significantly higher national price levels than those with flexible regimes. For industrial countries, the association between regimes and price levels is qu...

Based on a classification of countries and territories according to their regime and anchor currency choice, the study considers the two major currency blocs of the present world. A nested logit regression suggests that long-term structural economic variables determine a given country’s currency bloc affiliation. The dollar bloc differs from the euro bloc in that there exists a group of countri...

In this paper we modify the method of Blanchard and Quah (1989) in order to estimate a structural VAR model appropriate for a small open economy. In this way we identify shocks to output and prices in the members of the two monetary unions that make up the African CFA Franc Zone. The costs of monetary union membership will depend on the extent to which price and output shocks are correlated acr...

We use a model of proportionate growth to describe the dynamics of international trade flows. We provide an explanation to the fact that the extensive margin of trade account for a large fraction of the greater exports of large economies, as well as for a number of stylized facts described by the literature on trade networks such as the power-law distribution of connectivity and the fat tails d...

JEL Classification Code(s): J 31, J 71) "Perceptions of Discrimination, Effort to Obtain Psychological Balance, and Relative Wages: Can We Infer a Happiness Gradient?" There is a substantial literature that finds a linkage between happiness and relative economic well being as measured by earnings or wages. There is also a well documented racial gap in wages. One explanation for this is disparat...

This study aims to forecast the COVID-19 spread in Indonesia involving vaccination factors using vector autoregressive with exogenous variables (VARX). The represented by active, recovered, and death case rate indicators acts as endogenous variables, while second-dose rates variables. Because sum of three one day is one, only two highest correlation are involved VARX modelling. other indicator ...

Reliable measures of the size and direction of changes in monetary policy are very crucial for examining the effects of monetary policy on the economy. Monetary Condition Index (MCI) can be used as a tool to assess the stance of monetary policy. This index is defined as the weighted average of different monetary transmission mechanism relative to their values in a base period. The weights in MC...

Subspace identification for closed loop systems has been recently studied by several authors. A class of new and consistent closed-loop subspace algorithms is based on identification of a predictor model, in a way similar as prediction error methods (PEM) do. Experimental evidence suggests that these methods have a behavior which is very close to PEM in certain examples. The asymptotical statis...