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on Open Economy Macroeconomics |
| By: | Broner, Fernando; Martin, Alberto; Meyer, Josefin; Trebesch, Christoph |
| Abstract: | How do shifts in the global balance of power shape the world economy? We propose a theory of alignment-based "hegemonic globalization", built on two central premises: countries differ in their preferences over policies (such as the rule of law or regulatory frameworks) and trade between any two countries increases with the degree of alignment in these policies. Hegemons promote policy alignment and thereby facilitate deeper trade integration. A unipolar world, dominated by a single hegemon, tends to support globalization. However, the transition to a multipolar world can trigger fragmentation, which is particularly costly for the declining hegemon and its closest allies. To test the theory, we use international treaties as a proxy for alignment and compile a novel "Global Treaties Database", covering 77, 000 agreements signed between 1800 and 2020. Consistent with the theory, we find that hegemons account for a disproportionate share of global treaty activity and that treaty-signing is a leading indicator of increasing bilateral trade. |
| Keywords: | Hegemon, globalization, trade integration, international coercion, international treaties, cooperation, multipolar world |
| JEL: | F02 F15 F50 F51 F55 F60 P45 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ifwkwp:320425 |
| By: | António Afonso; José Alves; Wojciech Grabowski; Sofia Monteiro |
| Abstract: | We examine the effects of debt distribution characteristics, specifically skewness and maturity concentration, on sovereign yields across OECD countries over the period 1995Q1 to 2020Q4. After computing specific Lorenz curves and Gini coefficients, we find that positive skewness generally exerts a dominant influence. Employing Panel Cointegration Techniques, we show that greater skewness is associated with higher sovereign bond yields and higher short-term interest rates, whether measured in face or market value. In contrast, an increase in debt concentration tends to reduce both sovereign bond yields and short-term interest rates. |
| Keywords: | sovereign debt concentration; yields; Gini coefficient; skewness; Panel Cointegration; OECD. |
| JEL: | C23 C58 G15 E44 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:ise:remwps:wp03812025 |
| By: | Anna Drahozalova (Institute of Economic Studies, Charles University, Prague, Czech Republic) |
| Abstract: | This paper contributes to the existing literature on exchange rate modelling by developing a new proxy for foreign exchange market imbalances. By utilizing the monetary presentation of the Balance of Payments we create a measure of net external flows and study its impact on the exchange rate. Focusing on the case of the Czech Republic, we account for the coexistence of fixed and floating exchange rate regimes by relying on the exchange market pressure (EMP) index. A vector autoregression model provides evidence of a causal relationship from net external flows to the EMP index. We find that a positive orthogonal shock to net external flows causes the Exchange rate to appreciate already in the short term with the effect peaking three months after the initial shock. |
| Keywords: | Foreign Exchange, Exchange Rates, Capital Flows |
| JEL: | F31 F32 F37 F41 G15 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:fau:wpaper:wp2025_13 |
| By: | Fuchs, Andreas; Siewers, Samuel |
| Abstract: | Timely assistance is a precondition for effective emergency relief in the aftermath of natural disasters. This paper shows that donor countries take faster aid decisions if they have stronger strategic interests at stake. We analyze a trilateral panel (donor, donor, recipient) of daily humanitarian aid decisions of 43 donor countries following 516 fast-onset natural disasters between 2000 and 2022. Identification relies on daily variation in donor responses and a series of multidimensional fixed effects. Our analysis reveals a bandwagon effect as donors follow their peers' commitments. This is largely explained by trade competition: the more donors compete over export and import markets, the faster they react to each other. The results are driven by government-to-government aid and underscore the importance of recipient-specific lead donors, who are natural first movers. These findings suggest that commercial competition can distort emergency relief and highlight that strategic interests shape even ostensibly altruistic behavior in international humanitarian aid. |
| Keywords: | humanitarian assistance, disaster relief, aid speed, donor competition, United Nations, emergency appeals, trade competition |
| JEL: | F35 F42 F53 H12 H84 O19 Q54 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ifwkwp:320426 |
| By: | Esquivel, Carlos; Samano Penaloza, Agustin |
| Abstract: | This paper develops a sovereign default model with capital accumulation, long-term debt, and fiscal rules with two distortions: debt dilution and private underinvestment. Fiscal rules generate a long-run economic expansion because they mitigate default risk caused by dilution, which increases capital accumulation. In the short run, however, the economy goes through a costly transition where consumption and investment drop to finance debt reduction. These dynamic trade-offs are quantified, and the welfare gains of fiscal rules are computed using a calibration for Argentina. A debt limit of 44 percent of gross domestic product attains the maximal welfare gain of 0.5 percent. Implementation of the debt limit generates short-lived drops in consumption and investment of 5 and 7 percent, respectively, and a long-run gross domestic product expansion of 1.4 percent. The paper relaxes the assumption of commitment to the rule and discusses how the threat of exclusion from implementing future rules provides enough incentives to avoid deviations. Welfare gains more than double in this case. |
| Date: | 2025–06–26 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:11156 |
| By: | Laura Felber |
| Abstract: | This paper examines the effects of exchange rate fluctuations on cross-border consumer spending in small open economies. Exploiting a large, unexpected and persistent central bank-induced exchange rate appreciation and drawing on a unique dataset of over 500 million anonymized debit and credit card transactions, I document a substantial and immediate impact on both cross-border shopping by domestic consumers and tourism spending by foreign consumers. The strongest spending adjustments are observed among domestic consumers living near the border and foreign consumers from neighboring countries. Furthermore, foreign consumers from neighboring countries exhibit high exchange rate sensitivity on both the extensive and intensive margins and shift their consumption from higher- to lower-value goods and services. These findings suggest significant substitution effects in consumption on impact and emphasize the important role of cross-border shopping in small open economies. The paper provides insights for policymakers and central bankers, especially in small open economies where the exchange rate channel is an important channel of monetary policy transmission. |
| Keywords: | Exchange rates, Consumption, Monetary policy, Exchange rate channel, Heterogeneity, Transaction payments data, Tourism, Event study |
| JEL: | D12 E21 E52 E58 F14 F41 R11 Z30 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:snb:snbwpa:2025-09 |
| By: | Louisa Roos (Department of Economics, Trinity College Dublin) |
| Abstract: | This paper examines how women and men’s labour respond differently to monetary policy changes, particularly exchange rate policy. The study leverages the unexpected unpegging of the Swiss franc from the Euro in 2015, which led to a significant appreciation of the Swiss franc. This currency appreciation increased women’s work volume relative to men’s. The effect is especially pronounced among the least educated women, who act as a labour buffer and are most responsive to macroeconomic fluctuations, underscoring the nuanced gender effects of monetary policy. |
| Keywords: | monetary policy, exchange rate, gender, labour |
| JEL: | E52 J16 B54 J21 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:tcd:tcduee:tep0725 |