A medium-scale open economy model of Australia

We estimate an open economy dynamic stochastic general equilibrium (DSGE)model of Australia with a number of shocks, frictions and rigidities, matching alarge number of observable time series. We find that both foreign and domesticshocks are important drivers of the Australian business cycle.We also find that theinitial impact on inflation of an increase in demand for Australian commoditiesis negative, due to an improvement in the real exchange rate, though there is apersistent positive effect on inflation that dominates at longer horizons.

Trade, extent of the market and economic growth 1960-1996

We find that trade and domestic market size are robust determinants of economic growth overthe 1960-1996 period when trade openness is measured as the US dollar value of imports andexports relative to GDP in PPP US$ ('real openness'). When trade openness is measured asthe US dollar value of imports and exports relative to GDP in exchange rate US$ ('nominalopenness') however, trade and the size of domestic markets are often non-robust determinantsof growth. We argue that real openness is the more appropriate measure of trade and that ourempirical results should be seen as evidence in favor of the extent-of-the-market hypothesis.

Foreign trade traps in the european periphery: Spain, 1870-1913

In this article we research into the difficulties that foreign trade imposed onSpanish process of integration into the international economy in the years priorto the First World War. We start out by examining some features of the foreigntrade structure of the country. By means of an econometric analysis of importand export series, it is possible to observe the presence of a trend towards tradedeficit, which was in force when Spain grew at a rate similar to that of itstrading partners. We also check that, in the absence of these compensatorymechanisms, adjustment in foreign payments could be reached by means ofprotective measures and the exchange rate.

Foreign trade traps in the european periphery: Spain, 1870-1913

In this article we research into the difficulties that foreign trade imposed onSpanish process of integration into the international economy in the years priorto the First World War. We start out by examining some features of the foreigntrade structure of the country. By means of an econometric analysis of importand export series, it is possible to observe the presence of a trend towards tradedeficit, which was in force when Spain grew at a rate similar to that of itstrading partners. We also check that, in the absence of these compensatorymechanisms, adjustment in foreign payments could be reached by means ofprotective measures and the exchange rate.

Out-of-sample forecast tests robust to the choice of window size

This paper proposes new methodologies for evaluating out-of-sample forecastingperformance that are robust to the choice of the estimation window size. The methodologies involve evaluating the predictive ability of forecasting models over a wide rangeof window sizes. We show that the tests proposed in the literature may lack the powerto detect predictive ability and might be subject to data snooping across differentwindow sizes if used repeatedly. An empirical application shows the usefulness of themethodologies for evaluating exchange rate models' forecasting ability.

Pass-through in dollarized countries: should Ecuador abandon the U.S. Dollar?

In this article we examine the convenience of dollarization for Ecuador today. As Ecuador is strongly integrated financially and commercially with the United States, the exchange rate pass-through should be zero. However, we sustain that rising rates of imports from trade partners other than the United States and subsequent real effective exchange rate depreciations are causing the pass-through to move away from zero. Here, in the framework of the Vector Error Correction Model, we analyse the impulse response function and variance decomposition of the inflation variable. We show that the developing economy of Ecuador is importing inflation from its main trading partners, most of them emerging countries with appreciated currencies. We argue that if Ecuador recovered both its monetary and exchange rate instruments it would be able to fight against inflation. We believe such an analysis could be extended to other countries with pegged exchange rate regimes.

Bands width, credibility and exchange risk: Lessons from the EMS experience

This paper presents an analysis of the credibility of the EMScurrencies that covers the period before and after the increase in thebands of fluctuation. Our credibility indicator is based on the inferredprobabilities derived from the estimation of a Markov-switching model(Hamilton (1989)) applied to the expected rate of depreciation. Theresults show that, for most of the currencies, credibility has improved,at least transitorily, after the increase in the bands. However, for allcurrencies, the credibility measured by the indicator proposed in thispaper has been eroded recently even with the widened bands.

Exploring the rate-limiting steps in visual phototransduction recovery by bottom-up kinetic modeling

Phototransduction in vertebrate photoreceptor cells represents a paradigm of signaling pathways mediated by G-protein-coupled receptors (GPCRs), which share common modules linking the initiation of the cascade to the final response of the cell. In this work, we focused on the recovery phase of the visual photoresponse, which is comprised of several interacting mechanisms. We employed current biochemical knowledge to investigate the response mechanisms of a comprehensive model of the visual phototransduction pathway. In particular, we have improved the model by implementing a more detailed representation of the recoverin (Rec)-mediated calcium feedback on rhodopsin kinase and including a dynamic arrestin (Arr) oligomerization mechanism. The model was successfully employed to investigate the rate limiting steps in the recovery of the rod photoreceptor cell after illumination. Simulation of experimental conditions in which the expression levels of rhodospin kinase (RK), of the regulator of the G-protein signaling (RGS), of Arr and of Rec were altered individually or in combination revealed severe kinetic constraints to the dynamics of the overall network. Our simulations confirm that RGS-mediated effector shutdown is the rate-limiting step in the recovery of the photoreceptor and show that the dynamic formation and dissociation of Arr homodimers and homotetramers at different light intensities significantly affect the timing of rhodopsin shutdown. The transition of Arr from its oligomeric storage forms to its monomeric form serves to temper its availability in the functional state. Our results may explain the puzzling evidence that overexpressing RK does not influence the saturation time of rod cells at bright light stimuli. The approach presented here could be extended to the study of other GPCR signaling pathways.

A Markov chain analysis of emotional exchange in voice-to-voice communication: Testing for the mimicry hypothesis of emotional contagion

Mimicry is a central plank of the emotional contagion theory; however, it was only tested with facial and postural emotional stimuli. This study explores the existence of mimicry in voice-to-voice communication by analyzing 8,747 sequences of emotional displays between customers and employees in a call-center context. We listened live to 967 telephone inter-actions, registered the sequences of emotional displays, and analyzed them with a Markov chain. We also explored other propositions of emotional contagion theory that were yet to be tested in vocal contexts. Results supported that mimicry is significantly present at all levels. Our findings fill an important gap in the emotional contagion theory; have practical implications regarding voice-to-voice interactions; and open doors for future vocal mimicry research.