64 research outputs found
Productive Development Policies in Latin American Countries: The Case of Peru, 1990-2007
How Much Do Trade and Financial Linkages Matter for Business Cycle Synchronization in a Small Economy?
PPP strikes back: aggregation and the real exchange rate
We show the importance of a dynamic aggregation bias in accounting for the PPP puzzle. We prove that the aggregate real exchange rate is persistent because its components have heterogeneous dynamics. Established time series and panel methods fail to control for this. Using Eurostat data, we find that when heterogeneity is taken into account, the estimated persistence of real exchange rates falls dramatically. Its half-life, for instance, may fall to as low as eleven months, significantly below the “consensus view” of three to five year
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