International Economics
- PROGRAM DESCRIPTION
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The objective of the International Economics Research Program is to provide high-quality research on various international economics topics that supports the work of policymakers by improving existing analytical tools and by providing direct policy recommendations. The program’s research projects include the following:
Real Business Cycles and the International Co-Movement Problem
During the last 20 years, the business cycles methodology has become an important branch in macroeconomics as it is able to analyze a wide range of macroeconomics issues. While the business cycles methodology is successful in replicating the behavior of real-world economies—the first requirement from any model used to analyze the effects of different policies—when it comes to open economies, these models perform poorly in many cross-country dimensions. This problem is known as the international co-movement problem. In order to use the business cycles methodology to analyze international economics policies, we must understand the source of this problem in order to evaluate the type of questions that are appropriate for these models to address. Our research, aimed at developing a model that accounts properly for cross-country effects, focuses on diagnosing the source of the discrepancy between theory and data.
Monetary Policy in Developing Countries
Most developed economies carry out a countercyclical monetary policy. They expand (reduce interest rates) during recessions, and contract (increase interest rates) in booms. This is the textbook optimal policy, as it stabilizes the economy and provides tools for a more secure economic environment. It has been recently documented that many developing countries run procyclical monetary policy, which is at odds with the textbook prescription. Our research focuses on better understanding the difference in the environments in which policymakers operate. Specifically, we try to evaluate whether a procyclical monetary policy is an optimum response to the unique environment developing countries face, or should authorities adopt policies similar to those used in developed economies.
- PUBLICATIONS
- 2007
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Social Capital, Barriers to Production and Capital Shares; Implications for the Importance of Parameter Heterogeneity from a Nonstationary Panel Approach
May 30 2007Peter Pedroni
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Financial Integration and Cyclicality of Monetary Policy in Small Open Economies
Mar 01 2007Yossi Yakhin
- 2006
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Water in the Israeli-Palestinian Conflict
Sep 01 2006Yossi Yakhin
- 2005
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Regional Income Divergence in China
Jun 01 2005Peter Pedroni, James Yudong Yao
- 2004
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A More People-Oriented Globalization for the 21st Century
Dec 08 2004Peter Pedroni
