Impact of Systematic Sampling on Causality in the presence of Unit Roots

Quite contrary to the stationary case where systematic sampling preserves the direction of Granger causality, this paper shows that systematic sampling of integrated series may induce spurious causality, even if they are used in differenced form.Systematic Sampling, Causality, Unit Roots, Cross covariance

How an Export Boom affects Unemployment

Does trade affect the equilibrium rate of unemployment? To theoretically examine this question, we incorporate firm-union bargaining considerations into a model with a booming external sector and a stagnating manufacturing sector. In the model, a sustained improvement in the terms of trade lowers unemployment. To empirically investigate the predicted determinants of the unemployment rate, we use data for Australia, a country whose prosperity has always depended on the value of its exports. We find strong evidence that higher export prices, capital accumulation in tradeable goods industries and a lower unemployment benefit replacement rate each reduce the equilibrium unemployment rate.

Base Money and Exchange Rate: Sources of Inflation in Indonesia during the Post-1997 Financial Crisis

The magnitude of the rise in inflation rate in Indonesia during the height of the 1997 financial crisis was among the sharpest that the East Asian economies has ever witnessed in the recent decades. This paper empirically tests the monetary hypotheses of inflation and compares and contrasts the sources of price changes during the pre- and post-1997 financial crisis. We find a high explanatory power of the monetary model for the post-crisis period, but not for the pre-crisis. The high volatilities of the local currency and the unprecedented rapid growth rate of base money during the post-crisis are found to be the two key monetary determinants of the inflation in the country.Inflation, Base Money, Expected Depreciation, Exchange Rate Policy, East Asian Financial Crisis