Assessing interdependence among countries' fundamentals and its implications for exchange rate misalignment estimates: An empirical exercise based on GVAR

Exchange rates are important macroeconomic prices and changes in these rates a ect economic activity, prices, interest rates, and trade ows. Methodologies have been developed in empirical exchange rate misalignment studies to evaluate whether a real e ective exchange is overvalued or undervalued. There is a vast body of literature on the determinants of long-term real exchange rates and on empirical strategies to implement the equilibrium norms obtained from theoretical models. This study seeks to contribute to this literature by showing that the global vector autoregressions model (GVAR) proposed by Pesaran and co-authors can add relevant information to the literature on measuring exchange rate misalignment. Our empirical exercise suggests that the estimate exchange rate misalignment obtained from GVAR can be quite di erent to that using the traditional cointegrated time series techniques, which treat countries as detached entities. The di erences between the two approaches are more pronounced for small and developing countries. Our results also suggest a strong interdependence among eurozone countries, as expected

Addressing important econometric issues on how to construct theoretical based exchange rate misalignment estimates

Exchange rate misalignment assessment is becoming more relevant in recent period particularly after the nancial crisis of 2008. There are di erent methodologies to address real exchange rate misalignment. The real exchange misalignment is de ned as the di erence between actual real e ective exchange rate and some equilibrium norm. Di erent norms are available in the literature. Our paper aims to contribute to the literature by showing that Behavioral Equilibrium Exchange Rate approach (BEER) adopted by Clark & MacDonald (1999), Ubide et al. (1999), Faruqee (1994), Aguirre & Calderón (2005) and Kubota (2009) among others can be improved in two following manners. The rst one consists of jointly modeling real e ective exchange rate, trade balance and net foreign asset position. The second one has to do with the possibility of explicitly testing over identifying restrictions implied by economic theory and allowing the analyst to show that these restrictions are not falsi ed by the empirical evidence. If the economic based identifying restrictions are not rejected it is also possible to decompose exchange rate misalignment in two pieces, one related to long run fundamentals of exchange rate and the other related to external account imbalances. We also discuss some necessary conditions that should be satis ed for disrcarding trade balance information without compromising exchange rate misalignment assessment. A statistical (but not a theoretical) identifying strategy for calculating exchange rate misalignment is also discussed. We illustrate the advantages of our approach by analyzing the Brazilian case. We show that the traditional approach disregard important information of external accounts equilibrium for this economy.

Development of a novel microextraction by packed sorbent-based approach followed by ultrahigh pressure liquid chromatography as a powerful technique for quantification phenolic constituents of biological interest in wines

A novel analytical approach, based on a miniaturized extraction technique, the microextraction by packed sorbent (MEPS), followed by ultrahigh pressure liquid chromatography (UHPLC) separation combined with a photodiode array (PDA) detection, has been developed and validated for the quantitative determination of sixteen biologically active phenolic constituents of wine. In addition to performing routine experiments to establish the validity of the assay to internationally accepted criteria (linearity, sensitivity, selectivity, precision, accuracy), experiments are included to assess the effect of the important experimental parameters on the MEPS performance such as the type of sorbent material (C2, C8, C18, SIL, and M1), number of extraction cycles (extract-discard), elution volume, sample volume, and ethanol content, were studied. The optimal conditions of MEPS extraction were obtained using C8 sorbent and small sample volumes (250 μL) in five extraction cycle and in a short time period (about 5 min for the entire sample preparation step). The wine bioactive phenolics were eluted by 250 μL of the mixture containing 95% methanol and 5% water, and the separation was carried out on a HSS T3 analytical column (100 mm × 2.1 mm, 1.8 μm particle size) using a binary mobile phase composed of aqueous 0.1% formic acid (eluent A) and methanol (eluent B) in the gradient elution mode (10 min of total analysis). The method gave satisfactory results in terms of linearity with r2-values > 0.9986 within the established concentration range. The LOD varied from 85 ng mL−1 (ferulic acid) to 0.32 μg mL−1 ((+)-catechin), whereas the LOQ values from 0.028 μg mL−1 (ferulic acid) to 1.08 μg mL−1 ((+)-catechin). Typical recoveries ranged between 81.1 and 99.6% for red wines and between 77.1 and 99.3% for white wines, with relative standard deviations (RSD) no larger than 10%. The extraction yields of the MEPSC8/UHPLC–PDA methodology were found between 78.1 (syringic acid) and 99.6% (o-coumaric acid) for red wines and between 76.2 and 99.1% for white wines. The inter-day precision, expressed as the relative standard deviation (RSD%), varied between 0.2% (p-coumaric and o-coumaric acids) and 7.5% (gentisic acid) while the intra-day precision between 0.2% (o-coumaric and cinnamic acids) and 4.7% (gallic acid and (−)-epicatechin). On the basis of analytical validation, it is shown that the MEPSC8/UHPLC–PDA methodology proves to be an improved, reliable, and ultra-fast approach for wine bioactive phenolics analysis, because of its capability for determining simultaneously in a single chromatographic run several bioactive metabolites with high sensitivity, selectivity and resolving power within only 10 min. Preliminary studies have been carried out on 34 real whole wine samples, in order to assess the performance of the described procedure. The new approach offers decreased sample preparation and analysis time, and moreover is cheaper, more environmentally friendly and easier to perform as compared to traditional methodologies.