Dynamic demand adjustment and exchange rate volatility

A common finding in the international-economics literature is that the elasticity of substitution between domestically produced and imported goods is smaller in the short than in the long run. Despite this, most of today's commonly used macroeconomic models assume this elasticity to be constant. This paper studies the implications of relaxing the assumption that the elasticity is constant over time horizons, through the modeling of habit formation. Compared to the standard model without habits, the proposed dynamic demand model exhibits substantially more volatile exchange rates and can generate higher real exchange rate persistence in the presence of interest rate smoothing. A high volatility of the exchange rate turns out to be optimal in this model and is hence not an artefact of the assumed monetary policy rule. Moreover, the dynamic demand model outperforms the standard model in terms of matching moments in data for a number of other variables

Optimism bias? The elasticity puzzle in international economics revisited

The elasticity of substitution between domestic and imported goods is a central parameter in macroeconomic models, but after decades of empirical studies there is no consensus on its magnitude. Earlier literature using time series arrives at low values, while more recent studies using panel-based econometric methods on disaggregated data find higher values. We examine the econometric methodology of this more recent literature, which follows the seminal work by Feenstra (1994), looking in more detail at the effect on the results of the non-linear mapping between reduced-form and structural parameters. Our main contribution is the use of bootstrap methods, which offer more insight into the Feenstra method and can explain why researchers applying it may tend to find high estimates. The bootstrap not only allows us to obtain considerably less biased estimates of the structural elasticity parameter, but also to better characterize their accuracy, a point vastly overlooked by the literature

Trade adjustment in the European Union - a structural estimation approach

We estimate the elasticity of substitution of a country’s imports, and that of its exports on the world market, for EU countries using sector level trade data. We present a new empirical strategy based on the identification scheme by Feenstra (1994), which enables the estimation of elasticities from data on exports. Moreover, our use of bootstrap methods allows us to obtain better elasticity measures, and to better characterize their accuracy. Our results show much heterogeneity in the estimates of the elasticity of substitution across industrial sectors. This, in turn, points to heterogeneity across countries, due to different production and trade structures. We obtain aggregate elasticities for the EU27 countries, with a mean of 3.5 for imports and 4.0 for exports, bringing us closer to traditional estimates and bridging the gap between the newer micro data estimates and the more traditional estimates found in the macroeconomic literature

Labour market modelling in the light of the financial crisis

This paper revisits the empirical relationship between unemployment and output, and its evolution following the financial crisis of 2008, with the aim of drawing potential consequences for labour market modelling strategies in place within the European System of Central Banks (ESCB). First, the negative correlation between output and unemployment (Okun’s law) at cyclical frequencies is found to be a robust feature of macro data across time, countries and identification schemes. Focusing on the euro area, the financial distress seems to have altered the dynamics of output and unemployment mainly at lower frequencies, interpreted as trend developments by the statistical filters used in the analysis. Looking at the implications for modelling strategies, we propose an extension of the standard labour search and matching model in which financial frictions impinge directly on the labour market rather than on the capital market, opening the way to protracted and lagged response of employment after a “financial” crisis. In terms of policy implications, the importance of the interplay between financial and labour market frictions in trend developments should be read as strong support for an ambitious structural reform agenda in Europe, so as to make our labour (and goods) markets more flexible and resilient

Comparing fiscal multipliers across models and countries in Europe

This paper employs fifteen dynamic macroeconomic models maintained within the European System of Central Banks to assess the size of fiscal multipliers in European countries. Using a set of common simulations, we consider transitory and permanent shocks to government expenditures and different taxes. We investigate how the baseline multipliers change when monetary policy is transitorily constrained by the zero nominal interest rate bound, certain crisis-related structural features of the economy such as the share of liquidity-constrained households change, and the endogenous fiscal rule that ensures fiscal sustainability in the long run is specified in terms of labour income taxes instead of lump-sum taxes

Comparing fiscal multipliers across models and countries in Europe. National Bank of Belgium Working Paper No. 278, March 2015

This paper employs fifteen dynamic macroeconomic models maintained within the European System of Central Banks to assess the size of fiscal multipliers in European countries. Using a set of common simulations, we consider transitory and permanent shocks to government expenditures and different taxes. We investigate how the baseline multipliers change when monetary policy is transitorily constrained by the zero nominal interest rate bound, certain crisis-related structural features of the economy such as the share of liquidity-constrained households change, and the endogenous fiscal rule that ensures fiscal sustainability in the long run is specified in terms of labour income taxes instead of lump-sum taxes

Comparing fiscal multipliers across models and countries in Europe

This paper employs fifteen dynamic macroeconomic models maintained within the European System of Central Banks to assess the size of fiscal multipliers in European countries. Using a set of common simulations, we consider transitory and permanent shocks to government expenditures and different taxes. We investigate how the baseline multipliers change when monetary policy is transitorily constrained by the zero nominal interest rate bound, certain crisis-related structural features of the economy such as the share of liquidity-constrained households change, and the endogenous fiscal rule that ensures fiscal sustainability in the long run is specified in terms of labour income taxes instead of lump-sum taxes

Comparative review of the nutritional value of cold-pressed pumpkin (cucurbita pepo l.) Seed oil of different origins

The objective of this study was to investigate the nutritional value of seven samples of cold pressed pumpkin oil of different origins and influence of seed origin on the content of the most important bioactive components. Four samples of a pumpkin oil is obtained by cold pressing of the seeds of domestic and Austrian varieties, and three samples of cold pressed oils were obtained from the seeds of unknown origin, taken by free choice in the market. As indicators of the nutritional values are determined by the composition and content of fatty acids, tocopherols and sterols. In the composition of the fatty acid were oleic dominant (34.2 +/- 0.09-43.9 +/- 0.04%) and linolenic fatty acid (30.8 +/- 0.09-46.9 +/- 0.015%). This study confirmed that the oil pumpkin dominant beta+gamma-tocopherol, whose contents ranged from 34.65 +/- 0.03 to 44.59 +/- 0.69 mg/100 g. We determine the composition and content of Delta(7)-phytosterols, especially for specific oil pumpkins. It was detected five Delta(7)-sterols: spinasterol, Delta(7,22,25)-stigmastatrienol, Delta(7,25)-stigmastadienol, Delta(7)-stigmasterol and Delta(7)-avenasterol. Dominant content was Delta(7,22)-stigmastadienol or spinasterol with 39.98 to 50.31% of the total content of sterols