Michael A. Kouparitsas

Is The United States an Optimum Currency Area? An Empirical Analysis of Regional Business Cycles

This paper develops a statistical model to study the business cycles of the eight U.S. BEA regions. By combining unobserved component and VAR techniques I identify not only common and idiosyncratic sources of innovation, but also common and idiosyncratic responses to common shocks. Using this model, I show, at the usual levels of statistical significance, that U.S. regions deviate significantly from Mundells notion of an optimum currency area. I identify five core regions that have similar sources of disturbances and responses to disturbances (New England, Mideast, Great Lakes, Rocky Mountains and Far West) and three non-core regions that differ significantly from the core in their sources of disturbances and/or responses to disturbances (Southeast, Plains and Southwest), at business cycle frequencies.

Trade structure, industrial structure, and international business cycles

This paper examines the extent to which the composition of a countrys production and trade differs among its trade partners. For example, does the US export the same bundle of goods to the UK as it does to Japan? If we find high dispersion in a countrys export and import bundles with its various trading partners, can this be linked to identifiable country characteristics? These findings are important for two reasons. First, they enrich our empirical understanding of the nature of trade. Second, they will stand as a guide for further development of economic theories of the international transmission of business cycles.

Understanding U.S. regional cyclical comovement: How important are spillovers and common shocks?

This article develops a statistical model to study the business cycles of the eight U.S. Bureau of Economic Analysis regions. The author shows that the high level of cyclical comovement among per capita incomes of U.S. regions is the byproduct of common shocks to the regions rather than shocks that originate in one region and subsequently spill over to other regions.

Should trade barriers be phased-out slowly? A case study of North America

Abstract A dynamic computable general is developed to analyze the effects of different phase-in rates of the Canada–US and North American Free Trade Agreements on their member countries, as well as the impact on the rest of their trading partners. The model is based on intertemporal optimization behavior of households and firms with fully specified countries/regions in which all prices and quantities are endogenously determined. I show that the size and the distribution of the welfare gains from these trade agreements are quite sensitive to the speed of trade liberalization. In particular, I find as a general rule that smaller member countries are better off under a more rapid phase-out of trade barriers, while larger member countries/regions are better off under a slower phase-out.