The real exchange rate in sticky price models: does investment matter?

This paper re-examines the ability of sticky-price models to generate volatile and persistent real exchange rates. We use a DSGE framework with pricing-to-market akin to those in Chari, et al. (2002) and Steinsson (2008) to illustrate the link between real exchange rate dynamics and what the model assumes about physical capital. We show that adding capital accumulation to the model facilitates consumption smoothing and significantly impedes the model's ability to generate volatile real exchange rates. Our analysis, therefore, caveats the results in Steinsson (2008) who shows how real shocks in a sticky-price model without capital can replicate the observed real exchange rate dynamics. Finally, we find that the CKM (2002) persistence anomaly remains robust to several alternative capital specifications including set-ups with variable capital utilization and investment adjustment costs (see, e.g., Christiano, et al., 2005). In summary, the PPP puzzle is still very much alive and well.Globalization ; Foreign exchange ; International finance ; Forecasting ; Mathematical models

Technical note on "The real exchange rate in sticky price models: does investment matter?"

This technical note is developed as a mathematical companion to the paper "The Real Exchange Rate in Sticky Price Models: Does Investment Matter?" (Institute working paper no. 17). It contains three basic calculations. First, we derive the equilibrium conditions of the model. Second, we compute the zero-inflation, zero-trade balance (deterministic) steady state. Third, we describe the log-linearization of the equilibrium conditions around the deterministic steady state. Simultaneously, we explain the system of equations that constitutes the basis for the paper to broaden its scope. Commentary is provided whenever necessary to complement the model description and to place into context the assumptions embedded in our DSGE framework.Globalization ; Foreign exchange ; International finance ; Forecasting ; Mathematical models

The timing and magnitude of exchange rate overshooting

Empirical evidence suggests that a monetary shock induces the exchange rate to overshoot its long-run level. The estimated magnitude and timing of the overshooting, however, varies across studies. This paper generates delayed overshooting in a new Keynesian model of a small open economy by incorporating incomplete information about the true nature of the monetary shock. The framework allows for a sensitivity analysis of the overshooting result to underlying structural parameters. It is shown that policy objectives and measures of the economy's sensitivity to exchange rate dynamic affect the timing and magnitude of the overshooting in a predictable manner, suggesting a possible rationale for the cross-study variation of the delayed overshooting Phenomenon. --Exchange rate overshooting,Partial information,Learning

Monetary Policy Rules and Foreign Currency Positions

Using an endogenous portfolio choice model, this paper examines how different monetary policy regimes can lead to different foreign currency positions by changing the cyclical properties of the nominal exchange rate. We find that strict inflation targeting regimes are associated with a short position in foreign currency, while the opposite is true for noninflation targeting regimes. We also explore how these different external positions affect the international transmission of monetary shocks through the valuation channel. When central banks follow inflation targeting Taylor-type rules, valuation effects of monetary expansions are beggar-thy-self, but they are beggar-thy-neighbour in a money growth targeting regime (or when monetary policy puts weight on output stabilization).Portfolio choice, international transmission of shocks, monetary policy

Mekaniseringen i dansk landbrug 1845-1920

Udviklingen af en dansk landbrugsmaskineindustri og mekaniseringen af det danske landbrug begyndte tøvende for henad tohundrede år siden. I kornsalgsperiodens indledende år vandt de nye redskaber langsomt større udbredelse efter inspiration fra især USA, men også fra de europæiske nabolande. De første produkter var enten amerikanske eller kopier af amerikanske produkter, men snart udvikledes en dansk landbrugsmaskineindustri. I denne artikel gennemgås de første mekaniserbare arbejdsprocesser og de første nye, industrielt fremstillede maskiner

Landbrugsmaskinindustrien i Randers amt 1800-1970.

Dansk Landbrugsmuseum, GI. Estrup foretog har sammen med Kulturhistorisk Museum i Randers en undersøgelse af landbrugsmaskinindustrien i Randers by og GI. Randers amt, der begyndte i 1996. Det er de foreløbige resultater af dette arbejde, som forfatteren gengiver i artiklen.Undersøgelsen viser, at der har været en ret betydelig lokal produktion i GI. Randers amt. I løbet af 1800-tallet kom der hurtigt gang i f. eks. plovproduktionen ved overgangen fra hjulplov til svingplov. Forfatteren gennemgår særligt tre lokale landbrugsmaskinfabrikanter.

Benefits of Cloud Computing: Literature Review in a Maturity Model Perspective

Cloud computing is drawing attention from both practitioners and researchers, and its adoption among organizations is on the rise. The focus has mainly been on minimizing fixed IT costs and using the IT resource flexibility offered by the cloud. However, the promise of cloud computing is much greater. As a disruptive technology, it enables innovative new services and business models that decrease time to market, create operational efficiencies and engage customers and citizens in new ways. However, we are still in the early days of cloud computing, and, for organizations to exploit the full potential, we need knowledge of the potential applications and pitfalls of cloud computing. Maturity models provide effective methods for organizations to assess, evaluate, and benchmark their capabilities as bases for developing roadmaps for improving weaknesses. Adopting the business-IT maturity model by Pearlson & Saunders (2007) as analytical framework, we synthesize the existing literature, identify levels of cloud computing benefits, and establish propositions for practice in terms of how to realize these benefits