Documents de treball

  • Non Tradable Goods and The Real Exchange Rate

    Working Paper Series No. 03/07

    Pau Rabanal, Vicente Tuesta
    • How important are nontradable goods and distribution costs to explain real exchange rate dynamics? We answer this question by estimating a gen- eral equilibrium model with intermediate and final tradable and nontrad- able goods. We obtain reasonable estimated parameter values using Bayesian methods, and find that the estimated model can match real exchange rate per- sistence and, to less extent, volatility. Nontradable sector technology shocks explain about one third of real exchange rate volatility. We present impulse responses to better understand the transmission mechanism of shocks in the open economy. We also show that in order to explain the low correlation between the ratio of relative consumption and the real exchange rates across countries, fiscal policy shocks are necessary in the model, in addition to tech- nology shocks.

  • Trade Patterns, Trade Balances and Idiosyncratic Shocks

    Working Paper Series No. 02/07

    Clàudia Canals, D.E. Weinstein, J. Vilarrubia, X. Gabaix
    • International Macroeconomics has long sought an explanation for current account fiuctuations that matches the data. The approaches have typically focused on better models and new macroeconomic variables. We demonstrate the limitations of this approach by showing that idiosyncratic shocks are an important cause of macroeconomic volatility even for large countries. When explaining these fiuctuations, standard macroeconomic models generally assume that firms are small and that their microeconomic shocks cancel out. We show that the high degree of concentration of bilateral trade fiows means that idiosyncratic shocks can have a significant impact on aggregate economic fiuctuations. We theoretically develop a decomposition of the variance of trade fiows into its macroeconomic and its microeconomic components. Taking the model to data on bilateral trade fiows from 1970 to 1997, we find that the most comprehensive macroeconomic model can only account for at most half of the observed variance in trade account volumes of each country. Thus, this paper highlights the importance of considering disaggregated data when modeling the current account.

  • Parental Employment and Time with Children in Spain

    Documento de trabajo 01/07

    Maria Gutiérrez-Domènech

    This paper studies the relationship between parental employment and time with children in Spain. We find large differences across genders in basic primary and secondary childcare, but not in quality primary childcare. The analysis shows no significant differences in quality primary childcare across employment status. Furthermore, the results indicate that more educated parents allocate more time to primary care. The study also suggests that a work schedule that finishes no later than 6 pm would raise significantly the time allocated to childcare by working parents.

  • The Determinants of Cross-Border Investment: A Value-Chain Analysis

    Documentos de Trabajo

    Marta Noguer, Clàudia Canals

    This paper contributes to the literature on the determinants of FDI. We use a new data set covering greenfield and expansion projects to examine which factors infiuence the decision to invest abroad. Our empirical framework is an augmented gravity model that incorporates elements of factor proportions theory. At the aggregate level, we find that distance discourages FDI, size and sharing a language encourages it, and that FDI targets relatively capital scarce countries. When we classify investment projects according to their stage in the chain of production, we observe a lot of variation across stages. Nevertheless, economic size, distance, and capital abundance are still determining factors for most value-chain stages and preserve the sign of their effects. Moreover, even though the results confirm FDI targetting capital scarce countries, we find ev- idence of a minimum requirement on the host country's capital endowment in all the stages of production except extraction. Finally, ease of doing business is also important, especially so for the location of regional headquarters.