Research Papers – Page 5 – Economics for Policy

Internal and External Rebalancing for Euro Area Members

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The mechanism is not new as far as it builds on the several existing proposals for a Common European Unemployment Insurance and are also present in the case of the less ambitious European stabilization fund. The novelty of the proposals consists in the financing of the fund with a flexible mix of VAT and payroll taxes.

Like Father Like Sons? The Cost of Sovereign Defaults in Reduced Credit to the Private Sector

João Tovar Jalles

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We investigate the impact of sovereign defaults on the ability of the corporate sector in emerging nations to finance itself abroad. We test the hypothesis that sovereign defaults have a negative spillover onto the private sector through credit rationing. (…)

Model-based Vs. Professional Forecasts: Implications for Models with Nominal Rigidities

João Tovar Jalles

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We compare model forecast error statistics with forecast error statistics of professional forecasts. We look at a standard sticky-prices–wages model, concluding that it delivers too strong a theoretical forecastability of the variables under scrutiny, at odds with the data (professional forecasts).

Productive Experience and Specialization Opportunities for Portugal: An Empirical Assessment

Miguel Lebre Freitas

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Following Hidalgo et al. (SciMag 317: 482–487, 2007),we use the structure of international trade to estimate a measure of “revealed relatedness” for each pair of internationally traded products, which intends to capture similarities in terms of the endowments or capabilities they use in production.

Empirical and Theoretical Consistent Early Warning System Models: the Case of Angola

Francesco Franco

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The objective of this work is to develop an early warning system (EWS) model to estimate the probability of a devaluation in Angola. We discuss the exchange market pressure (EMP), a measure that is commonly used in the literature to identify a crisis event and used as the dependent variable in EWS models, and find that is not always a valid proxy for devaluation pressures.

Cross-country Evidence on the Quality of Private Sector Fiscal Forecasts

João Tovar Jalles

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This paper provides evidence of the quality of private sector forecasts of the budget balance between 1993 and 2009 for a sample of 29 countries, grouped into advanced and emerging countries. We find large differences across the two groups: forecasts for advanced economies are much more accurate than for emerging economies and much less subject to a bias towards optimism (…)

The Output Cost of Gender Discrimination: A Model-based Macroeconomics Estimate

José Tavares

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We use a growth model in which saving, fertility and labour market participation are endogenous, to quantify the cost that barriers to female labour force participation impose in terms of an economy’s output. The model is calibrated to mimic the US economy’s behaviour in the long-run. (…)

What Determines the Likelihood of Structural Reforms?

João Tovar Jalles

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We use data for a panel of 60 countries over the period 1980–2005 to investigate the main drivers of the likelihood of structural reforms. We find that: (i) external debt crises are the main trigger of financial and banking reforms; (ii) inflation and banking crises are the key drivers of external capital account reforms; (iii) banking crises also hasten financial reforms; and (iv) economic recessions play an important role in promoting the necessary consensus for financial, capital, banking and trade reforms, especially in the group of OECD-countries. (…)

Local Taxation of Global Corporation: A Simple Solution

Susana Peralta

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The globalization of world markets has prompted firms’ search for benefits of international tax differentials. In this paper we consider a simple world with two countries and two multinationals with a division in each country. Both countries, that differ in market size, use a source-based profit tax on multinationals, who compete à la Cournot in local markets and use profit shifting based on the tax differential. (…)