Trade Costs and Some Puzzles in International Macroeconomics
AbstractObstfeld and Rogoff (2001) argue that trade costs provide at least part of the explanation for a number of puzzles in international macroeconomics. Using data on imports to the United States from developed economies, this paper investigates whether trade costs are associated with correlations associated with three of these puzzles: the Feldstein-Horioka saving-investment puzzle; the purchasing power parity real exchange rate persistence puzzle; and the international consumption correlation puzzle. In general there is some evidence in support of Obstfeld and Rogoff’s argument, though the parameters are often imprecisely estimated.
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Bibliographic InfoPaper provided by Reserve Bank of Australia in its series RBA Research Discussion Papers with number rdp2007-10.
Date of creation: Oct 2007
Date of revision:
Find related papers by JEL classification:
- F00 - International Economics - - General - - - General
- F3 - International Economics - - International Finance
- F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-10-20 (All new papers)
- NEP-CBA-2007-10-20 (Central Banking)
- NEP-INT-2007-10-20 (International Trade)
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