Another Look at the Null of Stationary RealExchange Rates. Panel Data with Structural Breaks and Cross-section Dependence

This paper re-examines the null of stationary of real exchange rate for a panel of seventeen OECD developed countries during the post-Bretton Woods era. Our analysis simultaneously considers both the presence of cross-section dependence and multiple structural breaks that have not received much attention in previous panel methods of long-run PPP. Empirical results indicate that there is little evidence in favor of PPP hypothesis when the analysis does not account for structural breaks. This conclusion is reversed when structural breaks are considered in computation of the panel statistics. We also compute point estimates of half-life separately for idiosyncratic and common factor components and find that it is always below one year.Purchasing power parity, Half-lives, Panel unit roottests, Multiple structural breaks, Cross-section dependence.

Age Structure and Regional Income Growth

A spatial econometrics cross-section analysis of the NUTS2 regions of the EU15 is carried out to examine whether the age structure of the regional population or differences in the regional age pattern affect growth of regional per capita income. We apply two parsimonious models of the age structure and both provide evidence that there is such a link and that spatial autocorrelation occurs. The most significant growth effect is generated by the age groups which are about the age of 30. After correcting for country specific effects, the evidence is slightly weaker. --demographics,age structure,regional growth,spatial econometrics