Buy foreign while you can: the cheap dollar and exchange rate pass-through

Despite the dollar’s real depreciation in the past few years, the U.S. trade deficit has continued to increase, with the level of imports reaching record highs. Why has the cheaper dollar not made imports more expensive and exports more attractive and, in turn, reduced the trade deficit? ; This article presents evidence on the degree of exchange rate pass-through (ERPT)—the extent to which U.S. domestic import prices have moved in response to changes in the exchange rate—from December 1993 through December 2004. Using monthly data, the authors first decompose domestic import prices to their foreign price and exchange rate components and then test for the presence of ERPT in selected import categories. ; According to their analysis, ERPT elasticity has trended downward for the main import categories during the ten-year period. But at the more disaggregated levels, ERPT showed an upward trend for some items during the last months of 2004, especially for capital and consumer goods. ; The authors interpret this shift as a sign that some foreign firms may have stopped absorbing exchange rate depreciations as the falling dollar has shaved away their profit margins. To be able to survive, some foreign exporters might begin passing through exchange rate depreciations to domestic import prices, the authors conclude.Foreign exchange rates ; Imports - Prices

Nurturing entrepreneurs, creating enterprises : technology business incubation in USA, Brazil and Argentina

Fil: Vilan, Diego. Universidad de San Andrés. Escuela de Administración y Negocios; Argentina."Technology Business incubation (TBI) is at the convergence of two global tendencias: the increasing economic importance of technology and the consequent rise of a new breed of techno-entrepreneurs that can manage the challenges imposed by it. The present work seeks to analyze and describe the technology incubation process, trying to identify the process’s most critical stages. In such a way, this study understands that the screening stage is the fundamental stage, and it is this perception shall be regarded as the project’s main hypothesis. The employed methodology included the study of three countrie’s experiences in the field: Argentina, Brazil and USA. A qualitative approach was pursued with both Latin American countries, performing on site interviews with local incubator’s managers. A more quantitative approach was used to include the U.S. market, basically using a closed on line questionnaire, which was answered optionally by NBIA’s registered members. The obtained results suggest that the screening stage may actually be regarded as the most important, as well as outlining other fundamental issues such as: 1. TBI usually develop strong bonds with government agencies 2. TBI usually develop alliances with academia or research centers 3. TBI usually have multiple financiar sponsors This work main contribution lies in its reconstruction of the incubation process; the analysis of a technology incubator’s needs, the description of the screening stage multiple phases and employed criteria, the explanation of the business models used by incubators, as well as the comparison of the incubation practices in different countries."Walter, Jorg

Should we worry about the inverted yield curve?

Government securities ; Interest rates

The evolution and implications of the U.S. current account deficit

The global economy has focused increasing attention on the U.S. current account deficit. Placing this economic measurement in perspective is central to understanding its potential effects.Balance of trade ; Foreign exchange

A falling dollar : good or bad news?

Against some other major currencies around the world, the value of the U.S. dollar has dropped considerably in recent years. Whether it helps or harms the U.S. economy is a matter of perspective.Dollar, American ; Foreign exchange

2011): “Risk Matters: The Real E¤ects of Volatility Shocks,”American Economic Review

seminars and conferences for useful comments. Beyond the usual disclaimer, we must note that any views expressed herein are those of the authors and not necessarily those of the Federal Reserve Bank of Atlanta or the Federal Reserve System. Finally, we also thank the NSF for …nancial support. This paper shows how changes in the volatility of the real interest rate at which small open emerging economies borrow have a quantitatively important e¤ect on real variables like output, consumption, investment, and hours worked. To motivate our investigation, we document the strong evidence of time-varying volatility in the real interest rates faced by a sample of four emerging small ope