An update of the macroeconometric model of the Polish economy NECMOD

The paper presents an update of the structural macroeconometric model of the Polish economy NECMOD. The updated version of the model is, similarly as its predecessor, used at the National Bank of Poland for forecasting and policy simulation exercises. NECMOD is a hybrid, medium-scale and partially forward-looking quarterly model with its structure rooted in the economic theory. Great emphasis has been put on modelling of the supply side of the economy and mechanisms that introduce high persistency of shocks. The present version of NECMOD was estimated on the data covering a period from 1995 to 2008. Its main advantage, as compared to the previous version, is a more detailed and coherent approach to the modelling of the external sector block. Now, secular changes in the exchange rate and foreign trade dynamics are explained jointly with reference to the taste-for-variety theory. Moreover, the current version of the model better reflects interdependencies between domestic and external sector, i.e. via exchange rate - wealth channel.Polish economy, macroeconometric model, macroeconomic model

Stylized Factson Bilateral Trade and Currency Unions

This paper explores and quantifies several aspects of the performance of currency unions using an augmented version of the gravity model and focusing on two samples, the world and Africa. Our empirical findings suggest that, in principle, membership in a currency union should benefit Africa as much as it does the rest of the world. In addition, we find evidence from both samples that the effect of currency unions on trade is large, almost a doubling; currency unions are associated with trade creation, increase price co-movements among members, and make trade more stable; and longer duration of currency union membership brings about more benefits, although with some diminishing returns.Trade;Bilateral trade;Economic models;samples, equation, free trade, statistics, trade creation, trade diversion, logarithm, dummy variable, trade agreements, monetary union, terms of trade, regional trade, free trade agreements, world trade, sensitivity analysis, trade effects, monetary unions, free trade area, trade arrangements, asymmetric shocks, trade area, trade agreement, survey, international trade, trade flows, instrumental variable, instrumental variables, standard deviation, world trade organization, economic integration, trade patterns, trade shocks, trading partners, volume of trade, trade values, trade areas, terms of trade shocks, equations, increased trade, free trade areas, world economy, increasing integration, interest groups, trade volume, missing observations, cross section analysis, regional trade arrangements, trade theories, trade performance, free trade arrangements, confidence intervals, trading patterns, neighboring countries, importing countries, sample selection, transport costs, economic community, political decisions, global markets, estimation technique, free trade agreement, trade openness, regional trade agreements, exchange rate risk, perturbations, statistical significance, trade policies, exchange rate regimes, optimum currency areas, commodity prices, trade impact, estimation of equation, impact of trade, time series, correlation, increasing trade, dummy variables, econometrics, open economies, common market, low trade, value of trade, trade data, trade flow

Are Africa's Currency Unions Good for Trade?

This paper explores and quantifies several aspects of the performance of Africa's currency unions. It benchmarks Africa's experience with that of the world using an augmented version of the gravity model and applying a comprehensive set of robustness checks. The empirical findings suggest that membership in a currency union should benefit Africa as much as it does the rest of the world. In addition, for both samples, we find evidence that (1) there is a significant currency union trade-generating effect; (2) currency unions are associated with trade creation and increased price comovements among member countries; and (3) the duration of currency union membership matters for trade: longer duration brings about greater benefits, and vice versa, however with some diminishing returns.