Number of results to display per page
Search Results
5572. Consumption, Durable Goods, and Transaction Costs
- Author:
- Robert F. Martin
- Publication Date:
- 01-2003
- Content Type:
- Working Paper
- Institution:
- Board of Governors of the Federal Reserve System
- Abstract:
- We study consumption of durable and nondurable goods when the durable good is subject to transaction costs. In the model, agents derive utility from a service flow of a durable good and a consumption flow of a nondurable good. The key feature of the model is the existence of a fixed transaction cost in the durable good market. The fixed cost induces an inaction region in the purchase of the durable good. More importantly, the inability to adjust the durable stock induces variation in consumption of the nondurable good over the inaction region. The variation is a function of the degree of complementarity between durable and nondurable goods in the period utility function, the rate of intertemporal substitution, and a precautionary motive induced by incomplete markets. We test the model using the PSID. Housing serves as the durable good. The data indicate an increase in consumption before moving to a smaller house and a decrease in consumption before moving to a larger house. This result is consistent with the model when there exists complementarity between the durable and nondurable good or when there is a strong precautionary effect.
- Topic:
- Economics, Industrial Policy, and International Trade and Finance
- Political Geography:
- United States
5573. Diversification, Original Sin, and International Bond Portfolios
- Author:
- Francis E. Warnock and John D. Burger
- Publication Date:
- 01-2003
- Content Type:
- Working Paper
- Institution:
- Board of Governors of the Federal Reserve System
- Abstract:
- While there is a severe home bias in U.S. investors' foreign bond portfolios, we find that portfolio weights are greater for countries with more open capital accounts and whose bond returns are less correlated with U.S. returns. Positions in local-currency-denominated bonds are particularly sensitive to past and prospective returns volatility. An analysis of changes in portfolio weights over time indicates that U.S. investors have recently moved out of smaller markets and those with low and declining credit ratings. Our data also allow for an analysis of the size and currency composition of international bond markets. We find that countries with stronger institutions and better inflation performance have larger local currency bond markets. An implication for developing countries is that creditor friendly policies, such as vigilance on the inflation front and the development of strong institutions, can enable local bond market development and may in turn attract global investors.
- Topic:
- International Relations, Economics, and International Trade and Finance
- Political Geography:
- United States
5574. Uncovered Interest Parity: It Works, But Not For Long
- Author:
- Jonathan H. Wright and Alain P. Chaboud
- Publication Date:
- 01-2003
- Content Type:
- Working Paper
- Institution:
- Board of Governors of the Federal Reserve System
- Abstract:
- The failure of uncovered interest parity can be ascribed to the existence of a risk premium. The size of this risk premium may shrink to zero over sufficiently small intervals of time. In contrast, because no interest is paid on intradaily positions and interest is instead paid discretely at the point when a position is rolled over from one day to the next, the size of the interest differential remains fixed over any interval that covers the time of the discrete interest payment. This is true no matter how short that interval is. Using a large dataset of high frequency exchange rate data, we run uncovered interest parity regression over different time intervals. We replicate the rejection of the uncovered interest parity hypothesis with daily data, but find results that are consistently much more supportive of the uncovered interest parity hypothesis over short windows of intradaily data that span the time of the discrete interest payment.
- Topic:
- Conflict Prevention, International Relations, Economics, and International Trade and Finance
5575. Long-Run Supply Effects and the Elasticities Approach to Trade
- Author:
- Joseph E. Gagnon
- Publication Date:
- 01-2003
- Content Type:
- Working Paper
- Institution:
- Board of Governors of the Federal Reserve System
- Abstract:
- Krugman (1989) argued that differences across countries in estimated income elasticities of import demand are due to omission of an exporter supply effect. He showed that such an effect can be derived in a theoretical model with economies of scale in production and a taste for variety in consumption. In his model, countries grow by producing new varieties of goods, and they are able to export these goods without suffering any deterioration in their terms of trade. This paper analyzes U.S. import demand from different source countries and finds strong evidence of a supply effect of roughly half the magnitude (0.75) of the income elasticity (1.5). Price elasticities for the most part are estimated close to -1, which is typical for the literature. Exclusion of the supply effect leads to overestimation of the income elasticity. Results based on U.S. exports to different destinations are less robust, but largely corroborate these findings.
- Topic:
- International Relations, Economics, and International Trade and Finance
- Political Geography:
- United States
5576. Firm-Level Access To International Capital Markets: Evidence From Chilean Equities
- Author:
- Francis E. Warnock and Sara B. Holland
- Publication Date:
- 01-2003
- Content Type:
- Working Paper
- Institution:
- Board of Governors of the Federal Reserve System
- Abstract:
- High growth, liquid Chilean firms have greater relative weights in U.S. equity portfolios, but the most important determinant of a firm's portfolio weight is whether it is listed on a U.S. exchange. Cross-listing does not, however, appear to have permanent benefits: Weights in U.S. portfolios of firms that cross-listed in the mid-1990s increased at the expense of firms that cross-listed earlier. Put another way, firms appear to be able to access international capital at the time of the cross-listing, but this access may well be short-lived.
- Topic:
- International Relations, Economics, and International Trade and Finance
- Political Geography:
- South America
5577. Living at the Edge: America's Low–Income Children and Families
- Author:
- Hsien-Hen Lu, Julian Palmer, Younghwan Song, Mary Clare Lennon, and J. Lawrence Aber
- Publication Date:
- 10-2003
- Content Type:
- Working Paper
- Institution:
- Institute for Social and Economic Research and Policy at Columbia University
- Abstract:
- By analyzing data from the Current Population Survey March Supplements, Living at the Edge explores the following questions about children in low-income families in the United States: What are the overall changes in the low-income and poverty rates for children over the past quarter century? How has the population of children in low-income families changed over the past decade? Which children are more likel to live in low-income famlies? How have changes in parental employment status affected the likelihood children living in low-income families? What are the state by state variations in child low-income and poverty rates, and how have these changed in the last decade? How does a more inclusive definition of family income and expenses affect our understanding of the poverty and near-poverty rates of children in low-income families?
- Topic:
- Economics, Human Welfare, and Industrial Policy
- Political Geography:
- United States
5578. Microcredit and Households Coping with HIV/AIDS: A Case Study from Zimbabwe
- Author:
- Carolyn Barnes
- Publication Date:
- 12-2003
- Content Type:
- Working Paper
- Institution:
- The National Academy of Public Administration
- Abstract:
- This study seeks to better understand the ways chronic illness and death, possibly associated with HIV/AIDS, negatively affect households and the impact of microcredit in helping affected households. This is achieved through analysis of data from clients of Zambuko Trust and non-client micro entrepreneurs, using proxy indicators of HIV/AIDS affected households. It also investigates the vetting of members by loan guarantee groups and the ways these groups deal with individuals affected by illness and death. Since members of loan groups serve as gatekeepers to loans, the internal dynamics of these groups as well as the MFI's policies and loan term s and conditions are important to understanding any push factors that might exclude HIV/AIDS infected and affected individuals. Suggestions from clients and other key stakeholders are provided on changes that might assist microfinance institutions and their clients to address the negative effects of HIV/AIDS.
- Topic:
- Economics, Human Welfare, and Poverty
- Political Geography:
- Zimbabwe
5579. NAFTA and Small Business Competitiveness in Mexico: The Impacts of Free Trade, Macroeconomic Policy, and Firm Management
- Author:
- Jerry Haar, Catherine Leroy-Beltrán, and Oscar Beltrán
- Publication Date:
- 04-2003
- Content Type:
- Working Paper
- Institution:
- The North-South Center, University of Miami
- Abstract:
- Despite compelling evidence that, for the most part , benefits from the North American Free Trade Agreement (NAFTA) have exceeded its costs in the United States, Canada, and Mexico, the policy debate continues in all three countries as to whether the accord has produced more “winners” or “losers.” In the case of Mexico, the focus country of this research project, both the Institutional Revolutionary Party (Partido Revolucionario Institucional — PRI) and the National Action Party (Partido Acción Nacional — PAN) have been supportive of NAFTA.
- Topic:
- Economics, Industrial Policy, and International Trade and Finance
- Political Geography:
- United States, Canada, North America, and Mexico
5580. A Resurgent MERCOSUR: Confronting Economic Crises and Negotiating Trade Agreements
- Author:
- Thomas Andrew O'Keefe
- Publication Date:
- 02-2003
- Content Type:
- Working Paper
- Institution:
- The North-South Center, University of Miami
- Abstract:
- Almost from the day it was launched on March 26, 1991, skeptics have predicted the imminent collapse of the Common Market of the South (Mercado Común del Sur — MERCOSUR), while some economists have fretted about the project's supposed protectionist designs to create a trade fortress. The most memorable example of the latter was a 1996 report written by a World Bank economist that relied on out-of-date trade statistics and attributed to MERCOSUR policies that were actually pre-existing national automotive regimes. More recent tirades have tried to blame Argentina's economic meltdown on its MERCOSUR membership. A well-known economist from a New York City investment bank has even gone as far as to proclaim MERCOSUR dead. Given all the invective directed against efforts to integrate South America's Southern Cone economically over the past decade, it is not surprising that MERCOSUR is misunderstood by many in North America.
- Topic:
- Economics, International Trade and Finance, and Treaties and Agreements
- Political Geography:
- South America, Latin America, and North America