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on Open Economy Macroeconomics |
| By: | Robin Döttling; Doron Levit; Nadya Malenko; Magdalena Rola-Janicka |
| Abstract: | We study whether investor voice can help address global externalities under fragmented regulation. In our setting, a multinational firm generates externalities across jurisdictions, national regulators face political frictions that can impede corrective regulation, and policy differences create scope for regulatory arbitrage and production leakage. We compare two channels of investor influence: corporate stewardship, which affects firms’ global operations, and policy advocacy, which affects local regulation. Both channels can help address global externalities, but their relative effectiveness depends on political frictions abroad. When these frictions are severe enough to prevent foreign regulation, leakage weakens policy advocacy but strengthens stewardship. When foreign regulation is politically feasible, however, stewardship can crowd out foreign regulation and reinforce policy miscoordination, while local policy advocacy can crowd in foreign regulation and reduce externalities abroad. |
| JEL: | D62 D72 F42 G34 G38 H23 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35778 |
| By: | Drechsel, Thomas; McLeay, Michael; Tenreyro, Silvana; Turri, Enrico |
| Abstract: | We show that the optimal monetary and exchange rate frameworks depend critically on the economy’s commodity exposure. We develop a flexible but tractable model economy with commodity exports and imports, in which international financial conditions depend on the commodity cycle. Stabilizing domestic prices is optimal for commodity exporters, in line with standard open-economy policy prescriptions. But when economies import commodities as production inputs, optimal policy largely ‘looks through’ their direct and indirect effects on domestic prices. In emerging economies, where financial conditions are closely related to commodity cycles, trade-offs are starker and limited credibility may make implementing optimal policy challenging. |
| Keywords: | monetary policy;exchange rates;inflation targeting;commodity prices;small open economy |
| JEL: | E31 E52 E58 F41 Q30 |
| Date: | 2026–09–07 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:140771 |
| By: | Samson Gebrerufael (Department of Economics, University of Pretoria, Private Bag X20, Hatfield 0028, South Africa); Renee van Eyden (Department of Economics, University of Pretoria, Private Bag X20, Hatfield 0028, South Africa); Rangan Gupta (Department of Economics, University of Pretoria, Private Bag X20, Hatfield 0028, South Africa) |
| Abstract: | This paper empirically evaluates the technological learning trajectory models of Porcile et al. (2023) across African countries categorized into three institutional regimes: developmental (Ethiopia, Mauritius, Rwanda), conflicting claims (Ghana, Kenya, Namibia, Tunisia), and neoliberal (Seychelles, South Africa). Using panel ARDL modeling, the study investigates the impact of real effective exchange rate (REER) depreciation on technological learning-by-doing, proxied by the growth rate of export income elasticity (GIEX). The results show no significant learning effects in the developmental regime due to immediate equilibrium adjustment and insignificant coefficients of REER depreciation. The conflicting claims regime demonstrates the same results, driven by low-complexity export baskets. Conversely, the neoliberal regime achieves a relatively persistent short-lived technological learning. However, its long-run REER growth coefficient is negative, confirming that over-reliance on price competitiveness retards long-run growth per Thirlwall's law. Ultimately, state failure hinders heavy intervention regimes in Africa, whereas moving toward the neoliberal framework yields better short-run learning outcomes. |
| Keywords: | technological learning-by-doing, REER depreciation, income elasticity of exports, developmental regimes, state failure |
| JEL: | F13 F41 F14 O47 O11 O33 O30 O43 P48 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:pre:wpaper:202625 |
| By: | Emanuele Brancati; Marco Brianti; Jaromir Nosal; Fabio Schiantarelli |
| Abstract: | Using the universe of Italian customs from 2000 to 2021, matched to firm balancesheets, we study how invoicing currency shapes exchange-rate exposure and profitability for two-sided trading firms. We document four facts. First, when a firm begins invoicing imports in dollars, it becomes far more likely to invoice exports in dollars the same year, with import-side adoption leading. Second, this matching is bilateral: a firm importing from a country in dollars disproportionately invoices exports to that country in dollars, a corridor structure that aggregate hedging cannot rationalize. Third, corridor alignment reduces profit variance beyond what aggregate net dollar exposure explains. Fourth, exchange-rate movements transmit to profits mainly through transactions rather than balance-sheet revaluation, and dollar-invoiced import quantities rise after a euro depreciation, concentrated in inputs linked to exports. We interpret these facts through a model of invoicing currency choice with a rich sourcing and export destination structure, driven by price-stability motives and the incentive to hedge country-specific risk. In the richest framework, invoicing currency choice is a real hedge against country risk, not only currency risk. |
| JEL: | F31 F41 G32 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:bol:bodewp:wp1232 |
| By: | Brancati, Emanuele (Sapienza University of Rome); Brianti, Marco (University of Bologna); Nosal, Jaromir (Boston College); Schiantarelli, Fabio (Boston College) |
| Abstract: | Using the universe of Italian customs from 2000 to 2021, matched to firm balance-sheets, we study how invoicing currency shapes exchange-rate exposure and profitability for two-sided trading firms. We document four facts. First, when a firm begins invoicing imports in dollars, it becomes far more likely to invoice exports in dollars the same year, with import-side adoption leading. Second, this matching is bilateral: a firm importing from a country in dollars disproportionately invoices exports to that country in dollars, a corridor structure that aggregate hedging cannot rationalize. Third, corridor alignment reduces profit variance beyond what aggregate net dollar exposure explains. Fourth, exchange-rate movements transmit to profits mainly through transactions rather than balance-sheet revaluation, and dollar-invoiced import quantities rise after a euro depreciation, concentrated in inputs linked to exports. We interpret these facts through a model of invoicing currency choice with a rich sourcing and export destination structure, driven by price-stability motives and the incentive to hedge country-specific risk. In the richest framework, invoicing currency choice is a real hedge against country risk, not only currency risk. |
| Keywords: | invoicing currency, exchange rate pass-through, corporate hedging, firm profitability, exchange rate exposure |
| JEL: | F14 F31 F41 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18943 |