Pier Carlo Padoan

The Theory of Exchange Rate Determination, and Exchange Rate Forecasting

The theory of exchange rate determination is in an unsatisfactory state. From the theoretical point of view the debates between the traditional flow approach and the modern asset-market approach have seen the victory of the latter. But from the empirical point of view the forecasting ability of the theoretical models remains very poor. The results of Meese and Rogoff (1983a, b) came as a shock to the profession. According to these studies, the current structural models of exchange-rate determination failed to outperform the random walk (RW) model in out-of-sample forecasting experiments even when the actual realised values of the explanatory variables were used (ex post forecasts). The results of Meese and Rogoff have been substantially confirmed in many subsequent papers, for example Alexander and Thomas (1987), but for a survey of the subsequent literature see Gandolfo, Padoan and Paladino (1990a, b).

Neomercantilism and international economic stability

In a recent paper, Barry Buzan disputes the widespread theory that associates a liberal international economic structure positively, and a mercantilist structure negatively, with international security. We do not take issue with Buzans arguments on this point; rather we disagree with some of his assumptions concerning the relationship between mercantilistic policies and the international economic order. Those of Buzans points that we question represent generally accepted views in the literature on mercantilism Buzans definition of mercantilism focuses essentially if not exclusively on protectionist trade policies. We prefer a more general definition based on Keynesian and post-Keynesian literature. By including the macroeconomic goals of neomercantilism, this definition accounts for a countrys foreign economic policy.

Capital liberalization and exchange rate expectations: the Italian case

In previous publications (Gandolfo and Padoan, 1990b, c) we examined the problem of modelling capital liberalization as a dynamic phenomenon (i.e. as the transition from a situation with capital controls to a situation with perfect capital mobility). Starting from the portfolio approach to capital movements, we showed that the presence of capital controls is reflected in the adjustment speed of the actual to the desired stock of net foreign assets. The latter does, in turn, depend on fundamentals.

Perfect Capital Mobility and the Italian Economy

The problem of modelling capital liberalisation has not yet been satisfactorily solved in the theoretical literature, nor do suitable empirical studies exist for the industrialised world.

North-North and North-South Debt Crises and the Role of Trade Adjustments

This paper addresses two questions. First it discusses some of the aspects of the interconnections between the North-South debt crisis and the more recent North-North debt crisis, i.e. the build-up of the US external debt. It also links the financial problems which have emerged from this interconnection to the trade imbalances which represent the other side of the coin of financial disequilibria. It takes a systemic, and medium term, perspective in the sense that it considers the relations between the large economic areas and their evolution, Secondly attention is centered upon the international organization of both financial and trade adjustments and how they are interconnected. In particular it is discussed how and to what extent cooperation in international finance and trade are facilitated by the current state of international relations, characterized by the replacement of US hegemony with a multipolar structure. Analysis draws on the theory of international financial crises, on the theory of strategic trade policies as well as on the theory of international regimes.

Two‐level games and structural adjustment: The Italian case

(1989). Two‐level games and structural adjustment: The Italian case. The International Spectator: Vol. 24, No. 3-4, pp. 128-140.