the speculative attack on the peso and the real exchange rate argentina 1979 1981 abstract this article applies a speculative attack model to argentina during its pre announced exchange rate system from january 1 1979 to june 30 1981 the model attempts to verify a rule whereby if domestic credit growth exceeds the rate of currency depreciation two things occur first the domestic price of non traded goods rises relative to the price of traded goods second foreign reserves decline until a point when a sudden speculative attack depletes remaining reserves causes a precipitous fall in the relative price of non tradables and forces the country onto a floating exchange rate regime in some important respects the model captures the argentinian experience yet in other respects if fails to do so

predicting exchange rate crises mexico revisited abstract this paper predicts ex ante probabilities of currency crises and sizes of expected devaluations month by month for mexico between 1980 and 1986 the forces contributing to speculative attacks on the mexican peso include domestic fiscal and monetary shocks external credit shocks and relative price shocks reducing domestic credit growth increasing the uncertainty surrounding this growth and reducing the size and perhaps increasing the frequency of currency realignments might have greatly reduced the amount of currency speculation against the peso between 1980 and 1986 anticipated external credit supply shocks played a relatively minor role during mexico s balance of payments crises

a computable general equilibrium analysis of brexit barriers to trade and immigration restrictions this paper estimates the economic effects of different types of restrictions on trade and immigration in the uk after brexit regarding trade restrictions we focus on the increase in tariffs and ntbs with respect to the eu we also analyze a scenario in which the uk removes all tariffs on its trade to all its trading partners concerning immigration we run a 5 year cumulative annual reduction in net migrants by 87 000 workers following oecd estimations the study is conducted using a 21 sector 5 region uk reu us china row computable general equilibrium cge model which allows us to estimate the impact on gdp welfare wages and capital remuneration together with sectoral output and trade flows our estimates suggest that brexit would negatively affect the uk much more than the eu welfare reductions would be between 0 38 and 1 94 for the uk while they would be between 0 03 and 0 17 in the eu this is because the eu is a crucial trade partner for the uk which cannot be easily substituted through trade with other regions in the world restrictions on migrants would bring about additional reductions in the range between 0 55 and 0 35 of gdp depending on whether they affect skilled or unskilled workers respectively

endogenous trade policy under foreign direct investment abstract using bernheim and whinston 1986 common agency game we endogenize trade policy in a duopoly composed of a domestic firm and a foreign firm where both firms influence the domestic government s trade policy via their contributions the foreign firm can jump over trade restrictions by undertaking foreign direct investment fdi in the domestic market the government prefers a voluntary export restraint ver to a tariff for two reasons first a ver leads to higher contributions from the foreign firm than a tariff second a ver provides a higher level of protection to the domestic firm without generating fdi by the foreign firm

the political economy of tariff protection in china evidence from the wto accession we analyze china s tariff rates at wto accession using a political economy approach a model drawing on branstetter and feenstra 2002 is used to derive an optimal tariff rate for each industry the model predicts that a government would set a high tariff rate if an industry is of large state owned enterprise soe share multinational share or small foreign import share from the model we reveal the chinese government s preference towards different interest groups under the binding tariff constraint from the wto commitments the estimated structural parameters imply that the political weights on both the soe profits and consumer income diminish with the economic opening more important the government still favours soes over consumer income our findings are consistent with the special features of china s economy economie politique de la protection tarifaire en chine resultats derives de l accession a l omc l auteur analyse a l aide d une approche d economie politique les droits de douane de la chine lors de son accession a l office mondial du commerce un modele s inspirant de branstetter feenstra 2002 est utilise pour deriver un droit de douane optimal pour chaque industrie le modele predit qu un gouvernement va fixer un droit de douane eleve si l industrie est soit partie du grand secteur des entreprises d etat ee du secteur des multinationales ou du secteur ou l importation est peu importante on revele les preferences du gouvernement chinois entre les divers groupes d interets face aux contraintes imposees par les engagements vis a vis l office mondial du commerce les parametres structurels calibres impliquent que le poids politique a la fois des profits des ee et des revenus des consommateurs diminue quand il y a liberalisation du commerce plus important peut etre le gouvernement favorise toujours les profits des ee plutot que le revenu des consommateurs ces resultats s arriment bien aux caracteristiques speciales de l economie chinoise

speculative currency attacks with endogenously induced commercial bank crises abstract to date all models of exchange rate crises ignore the existence of a commercial banking sector however if deposit money internal drain is used to purchase foreign exchange external drain then an external drain may give rise to a banking crisis the paper illustrates how an internal drain alters the dynamics of a speculative attack when it results in a cash payments restriction by interrupting the external drain such a restriction postpones devaluation and reduces the size of the initial devaluation the us internal and external drains of 1893 are discussed to provide motivation and support for the model

a new approach to modeling early warning systems for currency crises can a machine learning fuzzy expert system predict the currency crises effectively abstract this paper presents a hybrid causal model for predicting the occurrence of currency crises by using the neuro fuzzy modeling approach the model integrates the learning ability of the neural network with the inference mechanism of fuzzy logic the empirical results show that the proposed neuro fuzzy model leads to a better prediction of crisis significantly the model can also construct a reliable causal relationship among the variables through the obtained knowledge base compared to neural network and the traditionally used techniques such as logit the proposed model can thus lead to a somewhat more prescriptive modeling approach based on determinate causal mechanisms towards finding ways to prevent currency crises

on the differential behaviour of national and multinational firms a within and across sectors approach this paper looks for different patterns of behaviour of national firms and multinational enterprises mnes its main contribution is the use of a computable general equilibrium perspective to analyse firms performance the model is calibrated for the case of the czech republic which has been a very attractive foreign direct investment location in the last three decades we replicate the arrival of mnes to different sectors of this country in turn and analyse the responses of both types of firms across the 20 different sectors in which the czech economy has been split our results grasp the short run impact the higher labour intensity of national firms leads them to different patterns of production and labour demand compared with mnes operating within the same sector the demand side of the model particularly exports and private consumption drives the evolution of production and labour demand across sectors regarding prices we also find a differential pattern between both types of firms within and across sectors our analysis offers detailed evidence on how the impact of mnes will differ depending on the sector to which they arrive finally the aggregate results suggest that a completely different microeconomic panorama may underlie rather similar macroeconomic outcomes

foreign direct investment competition and industrial development in the host country this paper analyses the impact of foreign direct investment fdi on the development of local firms we focus on two likely effects of fdi a competition effect which deters entry of domestic firms and positive market externalities which foster the development of local industry using a simple theoretical model to illustrate how these forces work we show that the number of domestic firms follows a u shaped curve where the competition effect first dominates but is gradually outweighed by positive externalities evidence for ireland tends to support this result specifically applying semi parametric regression techniques on plant level panel data for the manufacturing sector we find that while the competition effect may have initially deterred local firms entry this initial effect has been outpaced by positive externalities making the overall impact of fdi largely positive for the domestic industry

likelihood versus timing of speculative attacks a case study of mexico abstract this paper estimates a survival model to identify the role of macroeconomic fundamentals on the likelihood and the timing of a currency crisis for mexico during 1982 1994 foreign reserve losses expansionary output expansionary monetary and fiscal policies an increase in inflation differentials and an appreciation of the real exchange rate appear to have contributed to the speculative pressures on the other hand the decline in foreign reserves and the increase in the share of short term foreign currency indexed debt seem to be the main factors which determined the timing of speculative attacks

the persistence of the peso problem when policy is noisy abstract the peso problem the market s belief that a discrete event may occur has frequently been blamed for the persistence of on average mistaken forecasts of macroeconomic variables this paper demonstrates how beliefs that a policy process may have switched can induce apparent ex post biased forecasts of exchange rates even after the switch has occurred furthermore during this peso problem period exchange rates may appear to contain a speculative bubble component since they will systematically deviate from the levels implied by observing fundamentals ex post and the conditional variance of exchange rates will exceed the variance implied by observing fundamentals

thirty years of currency crises in argentina external shocks or domestic fragility participation has been quite volatile in the early 1800s in the midst of the lending boom fueled by the end of the napoleonic wars argentina and many other countries in latin america were able to issue bonds in london to finance their wars of independence and the civil wars that followed this lending boom ended in the summer of 1825 when the bank of england raised the discount rate to stop the drain in its reserves the tightening of liquidity was followed by stock market crashes banking problems and recessions in england and on the continent within months the crisis also spread to latin america argentina defaulted in 1827 in the midst of what is known as the first latin american debt crisis only resuming payments in 1857 similar international capital flow booms to emerging markets occurred in 1867 72 1880 90 1893 1913 and 1920 29 fueled by an easing monetary stance in the financial centers of those times and by the financial needs of railway expansion urbanization and development of the banking sector of countries in the periphery while argentina was heavily involved in all these capital flow bonanzas its participation was quite volatile with financial crises often following booms 1

evidence and explanation for the tariff lobbying paradox endogenous tariffs fall as protectionist lobbying rises recent empirical evidence suggests that u s protectionist lobbying expenditures rose while u s trade barrier fell we find that the same result holds in our panel data sample from 28 countries be

balance of payments crises and devaluation the collapse of a fixed exchange rate is typically marked by a sudden balance of payments crisis in which speculators fleeing from the domestic currency acquire a large portion of the central bank s foreign exchange holdings faced with such an attack the central bank often withdraws temporarily from the foreign exchange market allowing the exchange rate to float freely before devaluing and returning to a fixed rate regime this paper links the timing of the initial speculative attack to the magnitude of the expected devaluation and to the length of the transitional period off loating an implication of the analysis is that there exist devaluations so sharp and transition periods so short that acrisis must occur the moment the market first learns that the current exchange parity will eventually be altered for sufficiently long transition periods the floating exchange rate overshoots its new peg before appreciating back toward it for shorter periods the rate depreciates monotonically to its new fixed level accordingly the central bank s return tothe foreign exchange market can occasion a capital outflow or a capital inflow this abstract was borrowed from another version of this item

speculative currency attacks and balance of payments crises abstract this paper reviews the recent theoretical literature on collapsing exchange rate regimes using a combination of technique intuition and realworld observation we discuss the literature s main insights point out some unresolved questions and offer suggestions for future research the survey should be of interest to both specialists and non specialists in the field of international macroeconomics

speculation and the decision to abandon a fixed exchange rate regime this paper investigates the extent to which it is possible for speculative attacks to be predictable given information on economic fundamentals a standard model of predictable attacks is extended to incorporate an optimizing monetary authority it is shown that while incorporating a forward looking monetary authority improves our understanding of many observed phenomena it also implies that the branch of the literature that places emphasis on predictable movements in fundamentals cannot generate predictable speculative attacks in addition the model provides useful insights into the viability of temporary nominal anchor policies and a theoretical foundation for an important empirical methodology

optimal antitrust policy under different regimes of fines abstract this paper shows how antitrust laws against price fixing can be enforced efficiently in the presence of asymmetric information between the authorities and the industry and under different regimes of pecuniary punishment we consider two regimes of fines that are often used in practice the first involves a fine based on revenues of the industry while the second is related to the damage caused to consumers the analysis shows that since investigation is costly it is optimal from a welfare point of view to tolerate some degree of collusion in both cases comparing the deterrence levels we show that no regime is a priori better than the other in addition we show that for industries where the possibilities of collusion are small the first system dominates the second in terms of efficiency conversely for high possibilities of collusion the second system is better

the boundaries of multinational enterprises and the theory of international trade this paper begins with a review of empirical evidence on multinational firms conceptual underpinnings of a theory are developed relying in particular on the notion of knowledge capital as a mobile joint input into geographically separated production facilities this idea is embedded in a simple two country general equilibrium model that supports multinational production in equilibrium under conditions consistent with the empirical evidence the final section examines internalization and shows why certain properties of knowledge capital also imply a preference for transferring technologies internally within the firm rather than through arm s length markets

collapsing exchange rate regimes shocks and biases abstract patterns in domestic credit creation stemming from inconsistent fiscal policies have received widespread attention for their role in aggrevating speculative attacks on central bank foreign exchange reserves and contributing to the collapse of exchange rate regimes this paper acknowledges the importance of monetary and fiscal discipline but also emphasizes the importance of other random shocks to the domestic money market most notably shocks from external credit supplies and relative prices policies of the domestic fiscal authorities are only partial catalysts for speculative attacks on a currency expansion of domestic credit stemming from the monetization of fiscal imbalances may be dominated by involuntary domestic credit expansions which are necessitated by surprise shortages in supplies of external capital further the unexpected availability of external capital translates into a lower net critical reserve floor making the depletion of central bank reserves by a speculative attack more difficult to accomplish relative price shocks also randomize the demand for nominal money balances and therefore may also have a strong direct influence on the probability of an exchange regime collapse empirical studies of exchange rate crises that neglect these considerations will produce biased estimates of both expected collapse probabilities and anticipated post collapse exchange rates

speculative attacks and macroeconomic fundamentals evidence from some european currencies abstract this paper evaluates the role of macroeconomic fundamentals in generating episodes of speculative pressures on six currencies of the european exchange rate mechanism erm the observed regime changes are first estimated by a set of speculative pressure indicators the contribution of economic fundamentals are then examined by using the implications of the basic speculative attack literature in general episodes of speculative pressures appear to be associated with a deterioration in economic fundamentals only for some of the sample currencies confirming the view that consistent macro policies are necessary but not sufficient to ensure the maintenance of an exchange rate peg

the effect of foreign acquisition on employment and wages evidence from finnish establishments employee characteristics by skill groups makes it possible to disentangle the effect of foreign ownership on wages from its effects on the quality of the workforce furthermore this information allows us to examine the heterogeneity of the effect of foreign acquisition on wages and employment third the long timespan of our data thirteen years enables us to consider the effects of foreign acquisition in the long run hiring and firing costs may delay the effects of foreign acquisition by looking at the effects of acquisition in several periods after it has taken place these delays can be taken into account we believe finland to be an interesting case study for the effects of foreign ownership it is a typical example of a small open economy where foreign investment plays an important role furthermore our data cover the years 1988 2001 when the share of foreign direct investments rose rapidly in finland this increase is depicted in figure 1 and it partly reflects the worldwide trend in foreign direct investment but the years 1988 2001 were also characterized by two phenomena which undoubtedly led to the increase in the share of foreign owned firms first finland experienced a very severe recession in the early 1990s and the recovery from this crisis was associated with a rapid restructuring of the economy and a growth of new industries in particular the export oriented high tech sector 2 second finland joined the european union in 1995 which naturally removed a considerable number of barriers to foreign investment in the finnish economy the results derived by both matching and regression methods indicate that foreign acquisition has a positive effect on wages in all skill groups this wage increase is not immediate but occurs within one to three years after the acquisition the magnitude of this effect increases with the level of schooling of the workers the results indicate that there is a small decrease in the share of highly educated workers after foreign acquisition the decrease in the share of highly educated workers after acquisition also seems to hold for domestic acquisitions the paper is organized as follows the next section briefly describes the theoretical background for the analysis and reviews some previous empirical findings the third section describes the statistical framework and the fourth section presents the data sets the results are provided in the fifth section the last section concludes the paper

reconsidering the empirical evidence on the grossman helpman model of endogenous protection the emergence of the grossman and helpman 1994 model of endogenous protection as the preeminent model in the political economy of trade literature has been significantly advanced by the finding that its predictions about the cross industry pattern of protection are broadly consistent with the data however in their empirical implementation of the grossman helpman model researchers have assumed the presence of multiple policy instruments and extraneous political factors we argue that incorporating these assumptions into the theory significantly changes its predictions about the cross industry pattern of protection jel classification f1 l emergence du modele de protection endogene de grossman helpman en tant que modele le plus important dans la litterature sur l economie politique du commerce international a ete confirmee de maniere significative quand on a decouvert que ses predictions quant au pattern de protection a travers les industries se trouvaient generalement confirmees par les donnees cependant dans leur verification empirique du modele de grossman helpman les chercheurs ont postule la presence de multiples instruments de politique publique et de certains facteurs politiques on suggere que l ajout de ces postulats change de maniere significative les predictions du modele quant au pattern de protection dans les divers secteurs

conditional versus unconditional trade concessions for developing countries we consider a small open economy that faces a commitment problem in trade liberalization we examine how the relationship with a large trading partner affects the ability of the small countrys government to sustain free trade through a reputational mechanism if the small country s government is patient enough it can overcome its domestic commitment without the help of the large country unconditional liberalization by the large trading partner has an ambiguous effect on the small country s dynamic incentives liberalization through a reciprocal trade agreement in which the large country lowers its tariffs conditionally on the small country doing the same unambiguously dominates unconditional liberalization by the large country as a way of boosting trade reforms and reinforcing policy credibility in the small country however if capacity in the import competing sector can only be reduced gradually a conditional reciprocal agreement may require an asynchronous exchange of concessions with the large country liberalizing before the small country

who determines mexican trade policy using a political economy approach the authors analyze the pattern of protection in mexico s manufacturing sector during the period of trade policy reforms 1985 89 when mexico experienced significant trade liberalization and an important inflow of foreign direct investment they take into account the potential effect of foreign direct investment on endogenous tariff formation it turns out that the data support this analytic approach in which the formulation of trade policy reflects political support and in which the presence of foreign direct investment in the sector strongly affects the pattern of tariff protection before and after reform in mexican manufacturing especially sectors with heavy foreign direct investment received greater protection in import competing sectors although the move toward greater openness was associated with a reduction in the influence of industrial and foreign investor lobbying

reciprocated unilateralism in trade policy abstract using the menu auction approach to endogenous determination of tariffs and allowing additionally for lobby formation itself to be endogenous this paper analyzes the impact of unilateral trade liberalization by one country on its partner s trade policies we find that such unilateral liberalization may induce reciprocal tariff reductions by the partner country intuitively unilateral liberalization by one country has the effect of increasing the incentives for the export lobby in the partner country to form and to lobby effectively against the import competing lobby there for lower protection

a critical evaluation of exchange rate policy in turkey abstract this paper reviews and critically evaluates the exchange rate policy followed in turkey in the post 1980 period during which a far reaching program of liberalization has been launched we conclude that the new exchange rate policy has been essential for turkey s regaining its creditworthiness furthermore it has positively contributed to growth of output and exports and to expansion of tradables production relative to nontradables persistence of inflation and weakness of private investment in tradables overshadow the successes recorded in other areas and cast doubt over the sustainability of turkey s outward orientation we argue that the root cause of these problems has been inconsistencies between overall economic policies rather than the exchange rate policy itself we compare the period of real appreciations since late 1998 with the earlier period of real depreciations and draw policy implications

learning large deviations and recurrent currency crises this article studies a version of obstfeld s journal of international economics 43 1997 61 77 escape clause model the model is calibrated to produce three rational expectations equilibria two of these equilibria are e stable and one is unstable dynamics are introduced by assuming that agents must learn about the government s decision rule it is assumed they do this using a stochastic approximation algorithm it turns out that as a certain parameter describing the sensitivity of beliefs to new information gets small the algorithm converges to a small noise diffusion process the dynamics of exchange rate changes are then characterized using large deviation techniques from freidlin and wentzell random perturbations of dynamical systems second edition berlin springer verlag 1998 these methods describe the sense in which the limiting distribution of exchange rate changes is approximated by a two state markov switching process where the two states correspond to the two e stable equilibria the model is calibrated to the exchange rate histories of argentina brazil and mexico currency crises in these countries resemble the predicted escape routes of the model a key feature of these escape routes is that expectations of a devaluation erupt suddenly without large contemporaneous shocks this is consistent with evidence showing that crises are often poorly anticipated by financial markets

balance of payments crises in an optimal portfolio model abstract balance of payments crises are often associated with large current account movements preceding and following the crises in this paper we treat the issue of balance of payments crises in a general equilibrium model to allow for such current account movements at the same time we model the portfolio decisions of the individuals in an explicit risk and return framework the resulting behavior for money demand foreign exchange reserves and current account is derived most importantly the risk and return framework allows for a discussion of the influence of uncertain government domestic credit policies on the current account behavior preceding the attack and on the probability of an attack

reserve and exchange rate cycles abstract many latin american countries appear locked into cycles of reserve loss devaluation and temporary reserve gains this paper shows how a dual exchange rate system with leakages may generate cycles in reserves and the premium between official and parallel exchange rates we study the dynamics of these cycles and their asymptotic behavior both analytically and numerically

strategic trade policy and welfare foreign equity ownership is shown empirically to weaken significantly and occasionally reverse common strategic trade policy results existing levels of u s cross ownership for example reduce the average optimal export subsidy by 47 relative to the brander and spencer journal of international economics 1985 18 83 100 value in industries with particularly high cross ownership and relatively small imputed labor rents optimal subsidies fall to less than one seventh of their former level previous studies which overlook high rates of cross ownership overstate the effectiveness of strategic policies most sharply in sectors with above average expected profitability scope for strategic investments and barriers to rent dissipation

voting for protection does direct foreign investment influence legislator behavior the political economy of trade protection has long been of interest to economists and policy makers the idea that levels of protection may be endogenous with trade flows has been a particularly important issue in the literature in general the endogenous protection literature postulates that import penetration will cause domestic interests to lobby more intensely for protection thus higher levels of import penetration lead to increased protection as a result a number of papers see for example arye l hillman 1982 wolfgang mayer 1984 robert e baldwin 1985 stephen p magee et al 1989 ronald d fischer 1992 have established that foreign firms will import less under a regime of endogenous protection than one where the level of protection is exogenous to trade flows on the empirical side daniel trefler 1993 finds that ignoring the endogeneity of trade and protection understates the impact of u s protection on imports by a magnitude of ten this abstract was borrowed from another version of this item

explaining the duration of exchange rate pegs abstract this paper is an empirical investigation of the duration of exchange rate pegs in 16 latin american countries and jamaica we identify factors that influence peg duration using logit analysis the real exchange rate and the level of international liquidity are significant determinants of the monthly likelihood of devaluation structural variables such as the openness of an economy and its geographical trade concentration and political variables such as changes in the executive also significantly affect the likelihood of a devaluation there is some evidence that the likelihood of a devaluation first rises and subsequently declines during the first year of a peg

serial correlation and the fixed effects model this paper generalizes the durbin watson type statistics to test the ols residuals from the fixed effects model for serial independence also generalized are the tests proposed by sargan and bhargava for the hypothesis that the residuals form a random walk a method for efficient estimation of the parameters is also developed finally an earnings function is estimated using the michigan survey of income dynamics in order to illustrate the uses of the tests and the estimation procedures developed in this paper

the use of the exchange rate for stabilization a real interest arbitrage model applied to argentina we model interest rate and portfolio determination under the risk of real currency devaluation taking into account risk aversion on the part of investors a simple extension of the friedman savage analysis of consumer behavior under uncertainty to a two period two country setting allows us to explicitly solve for the interest rate premium paid in the risky asset the model is applied to the 1979 1980 argentinean experiment with the pre announced exchange rate empirical results suggest that a safety factor central bank reserves as a fraction of m2 is closely related to the net ex ante and ex post arbitrage differentials in favor of argentina relative to the united states jel d8

trade and the variety of democratic institutions students of comparative politics have long acknowledged the importance of such institutional factors as electoral systems parliamentary versus presidential rule and the strength of parties but they have either regarded the institutions as given or have explained them entirely in domestic terms associating proportional representation for example with the intensity of social cleavages in economically advanced democracies however these institutional aspects can be plausibly linked to dependence on trade proportional representation the parliamentary system strong parties and large electoral districts have survival value for developed democracies exposed to trade that the recently revived agitation for proportional representation in the united kingdom has been cast explicitly in terms of economic necessity and dependence on trade adds force to this argument and suggests the need for further historical research on other cases of institutional adaptation and change

tariff reductions under foreign factor ownership in the presence of foreign factor ownership the traditional welfare effects of tariff reforms have to be reconsidered to include income redistribution between national and foreign owned factors jagdish n bhagwati and richard a brecher 1980 showed that when the relative amount of foreign owned factors in the host country is sufficiently large to induce a change in the direction of the trade pattern immiserizing tariff reductions may occur here it is shown that in the mirror case when foreign owned factors tend to promote the existing trade pattern i e trade promoting similar results can be obtained on the other hand when foreign factors are trade substituting tariff reductions cannot be immiserizing

the political economy of used automobile protection in latin america i n the wake of the debt crises of the early 1980s latin america embarked upon a process of trade liberalisation the levels of both average tariffs and tariff dispersions fell throughout the region as did the coverage of non tariff barriers in the case of used automobiles however this liberalisation has not in general taken place many latin american countries retain significant restrictions on the imports of used automobiles even as liberalisation has occurred in the new automobile sector from a factor proportions standpoint these restrictions are difficult to justify for a number of reasons elucidated by sen 1962 used machinery should be imported relatively intensively into labourabundant countries such as those of latin america further this insight was specifically applied to the case of used automobiles by grubel 1980 the key factor identified by grubel is the lower repair costs of used automobiles in developing countries importantly grubel s analysis suggests that the bulk of the gains from trade in used automobiles would accrue to the developing countries explaining latin american protection against imports of used automobiles requires an exploration of the political economy of the protective measures in this paper we make a preliminary attempt at this exploration we begin in the following section by presenting the degree of used passenger automobile protection in 24 latin american and caribbean countries this is followed by a

speculative attack and the external constraint in a maximizing model of the balance of payments balance of payments models of speculative attack differ from non renewable resource models in that foreign exchange reserves may be borrowed from abroad this paper shows that in an idealized world where all private income is subject to lump sum taxation central bank reserves can become infinitely negative without violating the government s intertemporal budget constraint none the less a growth rate of domestic credit exceeding the world interest rate if maintained indefinitely leads to violation of the constraint in the paper s model given an assumed limit to official external borrowing the paper next analyses inevitable transitions between fixed and floating exchange rate regimes when individual preferences are explicitly specified in a discrete time deterministic model the collapse of a fixed rate may be characterized by two successive speculative attacks

financial policy and speculative runs with a crawling peg argentina 1979 1981 abstract in this paper we present a model of a balance of payments crisis and examine the argentine experiment with a crawling peg between december 1978 and february 1981 the approach taken allows us to examine the evolution of a crisis when a collapse is not perfectly foreseen and yields plausible estimates of one month ahead probabilities of a collapse of the crawling peg the results suggest that the viability of an exchange rate regime depends on the consistency of exchange rate policy with domestic credit policy if the two are not consistent confidence in exchange rate policy is undermined

rational and self fulfilling balance of payments crises speculative attacks on a pegged exchange rate must sometimes occur ifasset price paths are to be free of abnormal profit opportunities suchattacks are fully rational as they reflect the market s response to aregime breakdown that is inevitable the authors shows that under someexpectations about policy balance of payments crises can also be purely self fulfilling events in such cases even a permanently viableregime may collapse and the economy will possess multiple equilibriacorresponding to different subjective assessments of the probability ofa crisis the behavior of the domestic interest rate will naturally reflect the possibility of a speculative attack copyright 1986 by american economic association

foreign direct investment education and wages in indonesian manufacturing this paper examines whether the higher wages paid by foreign owned manufacturing plants than by domestically owned plants typical of most countries represents a higher price for labor that is does it reflect a higher price for workers of a given quality as represented by the level of education we then ask whether foreign owned plants pay a higher price for labor given the characteristics of the plants foreign owned firms are found to pay a higher price for labor of a given educational level than domestically owned ones only a part of the difference is associated with plant characteristics rather than ownership

exchange market mayhem the antecedents and aftermath of speculative attacks exchange market mayhem the antecedents and aftermath of speculative attacks this paper evaluates the causes and consequences of episodes of turbulence in foreign exchange markets using data from 1959 through 1993 for twenty oecd countries we consider the antecedents and aftermath of devaluations and revaluations flotations fixings and speculative attacks which may not be successful we find that realignments of fixed exchange rates are alike devaluations are preceded by political instability budget and current account deficits and fast growth of money and prices revaluations are mirror images of devaluations speculative attacks resemble devaluations but money growth and inflation are more endemic and there is no last minute attempt to tighten monetary policy in contrast few consistent correlations link regime transitions like flotations or fixings to macroeconomic or political variables transitions between exchange rate regimes are largely idiosyncratic and are neither consistently provoked ex ante by systematic imbalances nor typically justified ex post by subsequent changes in policy we conclude that there are no clear early warning signals of many speculative attacks and no easy solutions for policy makers barry eichengreen andrew k rose and charles wyplosz

collapsing exchange rate regimes some linear examples abstract we construct a pair of linear examples to study the collapse time of a fixed exchange rate regime the first example is a perfect foresight continuous time model which allows calculation of the exact collapse time and the tracking of reserves the second example is a discrete time stochastic model which yields an endogenous probability distribution over the collapse time and produces a forward discount of the exchange rate

a cge analysis of the impact of foreign direct investment and tariff reform on female and male workers in tanzania summary this study analyzes the impact on female and male workers of tariff reform and the reduction of regulatory barriers faced by domestic and foreign firms operating in business services it develops a data set that distinguishes labor by gender for 52 sectors and four skill categories the model is the first to incorporate modern trade theory to assess its gender implications the dixit stiglitz framework results in productivity gains which increase remunerations across all worker categories however this is less beneficial for women because the less skilled workers and the ones that are less involved in business services gain less

foreign exchange futures prices under fixed exchange rates abstract this paper develops three models for the determination of foreign exchange futures prices under fixed exchange rates and expectations of devaluation these models show that certain characteristics of futures prices behavior that have been used as proof of inefficiency may be present even if the market is efficient they also have several implications that are consistent with the observed behavior of mexican pesos futures prices

china trade policy review a political economy approach chinese trade policy has experienced great reversal in the year of 2008 a series of constraining measures taken previously have been loosened eventually we investigate this situation using a political economy approach unlike in democratic countries where interest groups play a crucial role in trade policy change in china given the political reality leaders will and trade partners pressure are the determinant factors we call this top down and outside in trade policy actually the idea of harmonious society and scientific development emphasised by top leaders in october 2006 paved the road for the following trade policy adjustment i e reducing tax rebate limiting processing trade compressing the catalogue for foreign investment etc however with the shock of a global financial tsunami these measures get coastal areas relying on foreign trade heavily into trouble the economic downturn in pearl river delta even astonished the decision making body calling on a quick reversal in foreign trade policy if interest groups had been allowed to express their demand formally and adequately from the very start the cycle of taking up first but giving up last in policy design would have not taken place in other words the bottom up and inside out trade policy should be more stable although flexibility is necessary in the face of uncertainty frequent and discretionary trade policy change usually produces effects of pro government not pro market this is unfavourable for the transformation in china the constraining trade policy in mid 2007 to mid 2008 has been a part of the government s desire to seek healthier development however with the inside and outside surroundings getting worse the structural adjustment long run objective has had to concede to the economic growth short run objective

speculative attacks with unpredictable or unknown foreign exchange reserves during a currency crisis speculators usually do not know the value of a central bank s foreign exchange reserves in this paper i show that modelling speculators as having imperfect knowledge of reserves enriches the predictions of the classical model of specula tive attacks with realistic lags in reserve reporting and costs to unsuccessful speculation successful speculative attacks will involve a jump depreciation unsuccessful attacks may occur attacks may occur when fundamentals are improving attacks may not be preceded by large increases in interest rates and fixed exchange rates may be abandoned with no attack and no decline in the money supply jel classification f3 1 attaques speculatives quand les reserves de devises etrangeres sont soit imprevisibles soit inconnues au cours d une crise monetaire les speculateurs ne connaissent pas normalement la valeur des reserves de devises etrangeres que la banque centrale a en main ce memoire montre qu une modelisation des speculateurs en postulant qu ils ont une connaissance imparfaite des reserves permet d enrichir les predictions du modele classique des attaques speculatives a partir d une evaluation realiste des delais dans les rapports sur la quantite de reserves et des couits d une speculation ratee on deter mine que les attaques speculatives reussies vont impliquer que se produise une deprecia tion discontinue que des attaques speculatives ratees puissent se produire que des attaques peuvent se produire quand les donnees fondamentales s ameliorent que des at taques ne peuvent pas etre precedees par de fortes augmentations des taux d interet et que des taux de change fixes peuvent etre abandonnes sans attaques et sans chute dans

trade foreign direct investment and industry performance abstract this paper investigates the us margins effect of imports and fdi using a panel of 448 manufacturing industries for 1982 1990 in the single equation two way fixed effects regressions greenfield fdi has no significant effect on margins while there is some indication that non greenfield fdi affect margins and the effect is found to depend on the level of industry concentration when potential endogeneity among variables are taken into account both types of fdi are found to increase margins however for non greenfield fdi the effect appears with a lag of two periods for the most part the results indicate that the positive effect on margins holds for industries with low levels of concentration beyond some critical level the competitive effect of fdi predominates

trade liberalization and economic stabilization in mexico lessons of experience abstract this article reviews the mexican trade liberalization of the past decade special attention is paid to the circumstances by which it was triggered to the macroeconomic environment and to the design of the process particularly the speed and extent of the trade reforms it is argued that although far reaching liberalization measures were carried out in a relatively short period of time the exposure of domestic industry to foreign competition was delayed considerably as a result of the exchange rate management during the process

multinational firms political competition and international trade policy this paper considers how the presence of multinational firms influences international trade policy that is determined as the outcome of political competition multinational firms have plants to protect in all policy jurisdictions and hence are more protectionist than national firms that at least have an interest in free trade in export markets nonetheless because of changed incentives for firms to provide political support for free trade and protectionist candidates an increased multinational presence via either merger or direct foreign investment has a liberalizing influence on trade policy copyright 1993 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association