Does Export Pricing Explain ‘Fear of Floating’ in Small Open Emerging Market Economies?

Trade data on East Asian EMEs shows the predominant use of Dollar Currency Pricing (DCP). Using a DSGE model with six-stage vertical production chain, staggered prices, and cross-border trade in intermediate inputs, we aim to provide an alternative explanation for ‘fear of floating’ by EMEs. We examine interactions between firms’ pricing rules and the transmission of external shocks under different exchange rate regimes. We find that weak input substitution and DCP of exports eliminate expenditure-switching and the allocative role of exchange rate adjustment, resulting in ‘exchange rate disconnect’, and hence ‘fear of floating’ by EMEs.Vertical production chain; Staggered price contracts; Input Substitution; External Currency Pricing; Monetary Policy

Openness and Growth: The Long Shadow of the Berlin Wall

The question whether international openness causes higher domestic growth has been subject to intense discussions in the empirical growth literature. This paper addresses this issue using the fall of the Berlin wall in 1990 as a natural experiment. We analyze whether the slow-down in convergence in per capita income between East and West Germany since the mid-1990s and the lower international openness of East Germany are linked. We address the endogeneity of openness by adapting the methodology proposed by Frankel and Romer (1999) in a panel framework. We instrument openness with time-invariant exogenous geographic variables and time-varying exogenous policy variables. We also distinguish different channels of integration. Our paper has three main findings. First, geographic variables have a significant impact on regional openness. Second, controlling for geography, East German states are less integrated into international markets along all dimensions of integration considered. Third, the degree of openness for trade has a positive impact on regional income per capita.openness, growth, German re-unification

Charge response function and a novel plasmon mode in graphene

Polarizability of non-interacting 2D Dirac electrons has a 1/\sqrt{qv-\omega} singularity at the boundary of electron-hole excitations. The screening of this singularity by long-range electron-electron interactions is usually treated within the random phase approximation. The latter is exact only in the limit of N -> infinity, where N is the ``color'' degeneracy. We find that the ladder-type vertex corrections become crucial close to the threshold as the ratio of the n-th order ladder term to the same order RPA contribution is (\ln|qv-\omega|)^n/N^n$. We perform analytical summation of the infinite series of ladder diagrams which describe excitonic effect. Beyond the threshold, qv>\omega, the real part of the polarization operator is found to be positive leading to the appearance of a strong and narrow plasmon resonance.Comment: 4 pages, 3 figures,typos correcte

Trade's Impact on the Labor Share: Evidence from German and Italian Regions

Has the labor share declined? And what is the impact of international trade? These questions are not only relevant in an international context they also matter for understanding the regional distribution of incomes in a given country. In this paper, we study two regions with trade exposures that differ from the rest of the country, and which display distinct changes in the labor share. East German and Southern Italian regions have a degree of international openness which is below the countries’ averages. At the same time, there has been a more pronounced decline in the labor share in East Germany than in West Germany. In Southern Italy, the labor share has increased in recent years. We show that increased trade openness is not the main culprit behind changing labor shares.labor share, trade, regions