We measure global real and nominal macroeconomic uncertainty and analyze its impact on individual countries’ macroeconomic performance. Global uncertainty is measured through the conditional variances of global factors in inflation and output growth, estimated from a bivariate dynamic factor model with GARCH errors. The impact of global uncertainty is measured by including the conditional varia...

This paper sheds light on two problems in the Penn World Table (PWT) GDP estimates. First,we show that these estimates vary substantially across different versions of the PWT despitebeing derived from very similar underlying data and using almost identical methodologies; thatthis variability is systematic; and that it is intrinsic to the methodology deployed by the PWT toest...

This paper empirically studies the effect of remittances on growth volatility. Using a panel of 60 countries over the period 1980-2004 the results suggest that remittances reduce growth volatility in environment with low level of financial development. This stabilizing effect of remittances is nonlinear i.e. it decreases with the level of remittances. The results also suggest that the dampening...

We consider inflation and debt dynamics under a global interest rate rule when private agents forecast using adaptive learning. Given the zero lower bound on interest rates, active interest rate rules are known to imply the existence of a second, low-inflation steady state. Under learning the economy can slip below this low-inflation steady state and be driven to an even lower inflation floor s...

We compare optimal and simple interest-rate rules. Our model features optimizing agents, monopolistic competition in both product and labor markets, and one-period nominal contracts (for wages alone or for both wages and prices) signed before shocks are known. Exact solutions ensure that we obtain correct welfare rankings. Optimal rules maximize the unconditional expected utility of the represe...

Consider the problem of a government that wants to control its debt-to-GDP (gross domestic product) ratio, while taking into consideration the evolution of the inflation rate of the country. The uncontrolled inflation rate follows an Ornstein-Uhlenbeck dynamics and affects the growth rate of the debt ratio. The level of the latter can be reduced by the government through fiscal interventions. T...

In this paper, we study the potential of stocks as a hedge against inflation for different investment horizons. We show that stocks can be a hedge against inflation even if stock returns are negatively correlated with unexpected inflation shocks, and only moderately positively related to expected inflation. Depending on the investment horizon, the optimal hedge ratio can be either positive or n...

We examine how the interaction between monetary policy and macroeconomic conditions affects inflation uncertainty in the long-term. The unobservable inflation uncertainty is quantified by means of the slowly evolving long-term variance component of inflation in the framework of the Spline-GARCH model (Engle and Rangel, 2008). For a cross-section of 13 developed economies, we find that long-term...

â â â  â â â  nowadays, the world economies are rapidly moving towards being more knowledge-based economy (kbe) and supporting the force of knowledge as a vital component of economic growth. this recent acceleration in the transition to knowledge-based economy in the world, has affected regional economic performance. in this paper, we surveyed the regional convergence in knowledge-based economy...