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Europe > Switzerland

You are looking at 1 - 8 of 8 items for :

  • Type: Journal Issue x
  • Empirical Studies of Trade x
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Cover IMF Working Papers
The Leisure Gains from International Trade
Agustin Velasquez
The average number of hours worked has been declining in many countries. This can be explained if workers have preferences with income effects outweighing substitution effects. Then, an optimal response to rising income is to reduce labor supply to enjoy more leisure. In this paper, I develop a novel structural link between trade and aggregate labor supply. Using a multi-country Ricardian trade model, I show that reducing trade barriers leads to fewer hours worked while being compatible with an increase in welfare. In addition, I derive an hours-to-trade elasticity and estimate it by exploiting exogenous income variation generated by aggregate trade. On average, I quantify that the rise in trade openness between 1950 and 2014 explains 7 percent of the total decline in hours per worker in high-income countries.
Keywords:
Hours worked; leisure; labor supply; Marshallian elasticity; uncompensated elasticity; international trade; Ricardian trade model; trade share; trade openness; hours-to-trade elasticity; Income; Real wages; Employment rate; Consumption; Global
Cover IMF Working Papers
The Stabilizing Role of Net Foreign Asset Returns
Gustavo Adler
and
Mr. Daniel Garcia-Macia
With the rapid growth of countries' foreign asset and liability positions over the last two decades, financial returns on those positions ('NFA returns') have become material drivers of current accounts and net stock positions. This paper documents the relative importance of NFA return versus trade channels in driving NFA dynamics, for a sample of 52 economies over 1990-2015. While persistent trade imbalances have been a strong force leading to diverging NFA positions, NFA returns have played an important stabilizing role, mitigating NFA divergence. The stabilizing role of NFA returns primarily reflects the response of asset prices, rather than yield differentials or exchange rates. There is also evidence of heterogeneity in the speed of NFA adjustment, with emerging market economies adjusting more rapidly than advanced economies, and reserve-currency countries adjusting more slowly than others. The paper also documents the role of NFA returns as insurance against domestic and global income shocks, with a focus on reserve-currency countries.
Keywords:
WP; NFA return; net foreign assets; international investment position; valuation changes; return differential; NFA position; valuation change; NFA dynamics; Asset prices; Trade balance; Insurance; Income shocks; Exchange rates; Global
Cover IMF Working Papers
Global Trade and the Dollar
Ms. Emine Boz
,
Ms. Gita Gopinath
, and
Mikkel Plagborg-Møller
We document that the U.S. dollar exchange rate drives global trade prices and volumes. Using a newly constructed data set of bilateral price and volume indices for more than 2,500 country pairs, we establish the following facts: 1) The dollar exchange rate quantitatively dominates the bilateral exchange rate in price pass-through and trade elasticity regressions. U.S. monetary policy induced dollar fluctuations have high pass-through into bilateral import prices. 2) Bilateral non-commodities terms of trade are essentially uncorrelated with bilateral exchange rates. 3) The strength of the U.S. dollar is a key predictor of rest-of-world aggregate trade volume and consumer/producer price inflation. A 1 percent U.S. dollar appreciation against all other currencies in the world predicts a 0.6–0.8 percent decline within a year in the volume of total trade between countries in the rest of the world, controlling for the global business cycle. 4) Using a novel Bayesian semiparametric hierarchical panel data model, we estimate that the importing country’s share of imports invoiced in dollars explains 15 percent of the variance of dollar pass-through/elasticity across country pairs. Our findings strongly support the dominant currency paradigm as opposed to the traditional Mundell-Fleming pricing paradigms.
Keywords:
WP; software package; U.S. dollar; exchange rate; Bayesian semiparametrics; bilateral trade; dominant currency; exchange rate pass-through; hierarchical Bayes; panel data; trade elasticity; invoicing share; dollar pass-through; pass-through coefficient; log growth; price pass-through; Exchange rates; Currencies; Exchange rate adjustments; Import prices; Imports; Global
Cover IMF Staff Country Reports
Kingdom of the Netherlands-Netherlands: Selected Issues
International Monetary Fund. European Dept.
This Selected Issues paper focuses on a steady increase in current account surpluses in ”Surplus 3” countries—Germany, the Netherlands, and Switzerland—since the mid-1990s. In Germany and the Netherlands, nonfinancial corporations seem to be behind the rising surpluses. In these countries, increasing corporate profits have not been converted into dividends, keeping a lid on consumption. In Switzerland, household savings seem to explain the bulk of the current account surplus: both mandatory and voluntary savings have been on an increasing trend since 2000. Trending net contributions to pension funds since 2000 and rising equity contribution for housing purchases are likely drivers.
Keywords:
ISCR; CR; current account surplus; NICs; surplus; income; elasticity assumption; income effect; inflation expectation; elasticity case; labor tax wedge; lending-borrowing balance; substitution effect; government savings-investment balance; current account dynamics; savings-investment surplus; Current account surpluses; Labor supply; Current account; Real effective exchange rates; Trade balance; Global; Europe
Cover IMF Working Papers
The Euro’s Effecton Trade Imbalances
Mr. Helge Berger
and
Volker Nitsch
When does trade become a one-way relationship? We study bilateral trade balances for a sample of 18 European countries over the period from 1948 through 2008. We find that, with the introduction of the euro, trade imbalances among euro area members widened considerably, even after allowing for permanent asymmetries in trade competitiveness within pairs of countries or in the overall trade competitiveness of individual countries. This is consistent with indications that pair-wise trade tends to be more balanced when nominal exchange rates are flexible. Intra-euro area imbalances also seem to have become more persistent with the introduction of the euro, some of which is linked to labor market inflexibility. Reviewing the direction of imbalances, we find that bilateral trade surpluses are decreasing in the real exchange rate, decreasing in growth differentials, and increasing in the relative volatility of national business cycles. Finally, countries with relatively higher fiscal deficits and less flexible labor and product markets exhibit systematically lower trade surpluses than others.
Keywords:
WP; trade imbalance; member country; dependent variable; imbalances; trade balance; trade surplus; trade deficit; euro; EMU; European integration; product market; × EMU; exchange rate variability; area trade; exchange rate volatility; euro area member; Plurilateral trade; Trade surpluses; Exchange rates; Trade deficits
Cover IMF Working Papers
Business Cycles in Small Developed Economies: The Role of Terms of Trade and Foreign Interest Rate Shocks
Mr. Jaime Guajardo
Empirical evidence for small developed economies finds that consumption is procyclical and as volatile as output, and real net exports are coutercyclical. Earlier studies have not been able to reproduce these regularities in a DSGE small open economy model when productivity shocks drive the business cycles and households have a normal intertemporal elasticity of substitution. Instead, these studies have reduced this elasticity to make consumption more procyclical and volatile and real net exports countercyclical. This paper shows that a standard model can reproduce these regularities, without lowering the intertemporal substitution, if the terms of trade and foreign interest rate are added as source of business cycle fluctuations. These shocks, compared to productivity shocks, make consumption and investment more volatile and procyclical relative to output, and make real net exports countercyclical.
Keywords:
WP; open economy
Cover IMF Working Papers
Exchange Rate Pass-Through and Dynamic Oligopoly: An Empirical Investigation
Dominique M. Gross
and
Mr. Nicolas Schmitt
This paper explicitly takes into account the dynamic oligopolistic rivalry among source producers to evaluate the degree of exchange rate pass-through. Using recent time-series techniques for the case of imported automobiles in Switzerland, the results show that prices are strategic complements and that the degree of pass-through is lower in the long run than in the short run. We attribute this to the fact that, although some rivals match long-term price changes, others do not, inducing the producer who faces a change in exchange rate to absorb a greater proportion of the variation.
Keywords:
WP; exchange rate; Exchange rate pass-through; Oligopoly; International trade; price interdependence; interdependence matter; price change; cost variation; price effect; B. price rivalry; price series; price decision; exogenous cost variable; C. price dynamics; cost effect; cost model; Exchange rates; Currencies; Exchange rate adjustments; Asset prices
Cover IMF Staff Papers
IMF Staff papers: Volume 27 No. 2
International Monetary Fund. Research Dept.
This paper analyzes the types of fiscal performance clauses incorporated in the 105 arrangements, bearing in mind the policy and practice to avoid performance clauses relating to specific fiscal measures, such as changes in particular forms of taxation and changes in specific elements of government expenditure. The most usual fiscal performance clause in the ten years to 1978 continued to be a sub ceiling on domestic bank credit to the government. A ceiling on credit expansion to this sector has proved to be a helpful technique for national authorities in obtaining political support for adequate fiscal policy actions and in retaining such support over time. A number of cases were noted where arrears in government payments were built up during the program period, sometimes in an effort to observe, technically, the relevant credit ceilings. It could be argued that such a practice, while not in the spirit of the agreement, forces a diversion of financial resources away from the private sector to the government.
Keywords:
SP; mixed-citation publication-type; unit value; international monetary system; rate of inflation; money balance; special drawing rights; International monetary system; Inflation; Exports; Trade balance; Gasoline; West Africa; Global; Europe; Africa