Monetary Policy, Exchange Rate Overshooting, and Endogenous Physical Capital

We develop an open economy macroeconomic model with real capital accumulation and microeconomic foundations. We show that expansionary monetary policy causes exchange rate overshooting, not once, but potentially twice; the secondary repercussion comes through the reaction of firms to changed asset prices and the firms' decisions to invest in real capital. The model sheds further light on the volatility of real and nominal exchange rates, and it suggests that changes in corporate sector profitability may affect exchange rates through international portfolio diversification in corporate securities.

The International Financial Reporting Standards and Their Implementation into the US Accounting System

This paper examines the differences between the International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP). The areas closely examined are the differences inrevenue recognition and reporting of intangibles. By investigating the differences in the two sets of standards I put into context the changes that would be necessary for domestic companies adopting the IFRS. The differences between these two standards are important because the implementation of IFRS into the U.S. is a current issue for domestic companies. It is important to note how the new standards will affect different companies in different ways. Depending on the size and industry, some companies will have a harder time transitioning to the new standards. However, once these companies make the transition to IFRS they will have better recognition and reporting of revenues and intangibles.

The Effects of Trade Orientation and Human Capital on Total Factor Productivity

We study the effects of trade orientation and human capital on total factor productivity for a pooled cross-section, time-series sample of developed and developing countries. We first estimate total factor productivity from a parsimonious specification of the aggregate production function involving output per worker, capital per worker, and the labor force, both with and without the stock of human capital. Then we consider a number of potential determinants of total factor productivity growth including several measures of trade orientation as well as a measure of human capital. We find that a high degree of openness benefits total factor productivity and that human capital contributes to total factor productivity only after our measure of openness passes some threshold level. Before that threshold, increases in human capital actually depress total factor productivity. Finally, we also consider the issue of convergence of real GDP per worker and total factor productivity, finding more evidence of convergence for the latter than for the former.