José García-Solanes

The Balassa-Samuelson Hypothesis in Developed Countries and Emerging Market Economies: Different Outcomes Explained

This paper studies the Balassa-Samuelson hypothesis in two areas with strong differences in economic development, sixteen OECD countries and sixteen Latin American economies. Applying panel cointegration and bootstrapping techniques that solve for cross-sectional dependence problems in the data, we find that the second stage of the hypothesis, which relates relative sector prices with the real exchange rate, only holds in the Latin American area. The failure of the latter in the OECD countries as a whole is reflected in departures from PPP in the tradable sectors, and is probably due to segmentation between national tradable markets.

The New Member States and the Process towards EMU

The authors apply two complementary empirical criteria to eight new member states (NMSs) of the European Union to assess how ready they are to adopt the euro. As a first step, they recover demand and supply shocks and calculate the social losses implied by the two relevant exchange rate regimes: flexible rates and currency board. As a second step, the authors calculate the real exchange rates variability that these countries are currently experiencing and compare it to that of three Mediterranean countries during a similar period before they joined the EMU. The combination of the results of both tests shows that Estonia and Slovenia are the only countries that seem ready to adopt the euro within the shortest period of time foreseen by the Maastricht criteria; that is, after the two mandatory years in the ERM2. The rest of the countries will probably still need some exchange rate flexibility to absorb external shocks in the coming years.

La sobrevaloración del tipo de cambio real de la economía española

En la primera parte de este trabajo se aplica el modelo de bienes comercializables y no comercializables para caracterizar los desequilibrios principales de la economia espanola y deducir la ecuacion que fundamenta el «Efecto Penn». En la segunda parte se estima esa ecuacion con datos anuales de seccion transversal para dos amplias muestras de paises y para cada uno de los anos del periodo 2000-2009. Se obtiene que en 2002 el tipo de cambio real de la economia espanola inicio un proceso de sobrevaloracion frente al resto del mundo que alcanzo su maximo en 2008 (entre 27% y 29%). En 2009, se redujo a un nivel entre 17% y 19% por el impacto deflacionario de la crisis economica. El trabajo analiza los desequilibrios que acompanaron a este desajuste, y deduce algunas prescripciones de politica economica para contrarrestarlos y/o resolverlos.

Complements to the Dynamic AS/AD Model of the Textbook of Jones (2008)

In this paper we enlarge the AS/AD model of the recent Jones (2008) textbook of Macroeconomics by adding two elements that enrich the dynamics and theoretical consistency of the model. On the one hand, we include endogenous dynamics in the AD function through the real exchange rate and, on the other hand, we replace the simple adaptive expectations scheme by a more flexible and general mechanism, in which the rate of inflation targeted by the central bank plays an important role. Our framework allows determine endogenously the level and dynamics of the real exchange rate, and contributes to better understanding the macroeconomic adjustments triggered by external shocks and policy actions.