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The US Federal Reserve’s new relaxed monetary policy (the so-called quantitative easing) has triggered controversy among economists and policy makers about its effectiveness. This paper investigates the role of monetary policy in managing... more
The US Federal Reserve’s new relaxed monetary policy (the so-called quantitative easing) has triggered controversy among economists and policy makers about its effectiveness. This paper investigates the role of monetary policy in managing the euro – dollar exchange rate via alternative cointegration tests and impulse response functions. It is found that monetary fundamentals have neither long- nor short-run impact on the exchange rate. This implies that the Fed’s quantitative easing schemes are unlikely to have any significant impact on the euro – dollar rate.
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The validity of four key international parity conditions (PPP, UIP, CIP and the forward market efficiency hypothesis) is tested in a joint modelling framework, using USA and Canadian data. The joint modelling framework allows for possible... more
The validity of four key international parity conditions (PPP, UIP, CIP and the forward market efficiency hypothesis) is tested in a joint modelling framework, using USA and Canadian data. The joint modelling framework allows for possible interactions among prices, interest rates, exchange rates and it accounts for the effect of the expectations formation. We report evidence for the joint validity of PPP and CIP between the USA and Canada, reflecting the high links in their commodity and capital markets. The weak exogeneity tests reveal some form of a monetary policy transmission mechanism from the USA to Canada.
The present paper examines the links between the main hypotheses which, as advocated by economic theory, determine the behaviour of exchange rates, in a joint modelling context. The hypotheses under consideration are the Purchasing Power... more
The present paper examines the links between the main hypotheses which, as advocated by economic theory, determine the behaviour of exchange rates, in a joint modelling context. The hypotheses under consideration are the Purchasing Power Parity (PPP), the Covered Interest Parity (CIP), the Expectations Theory (ET), the Uncovered Interest Parity (UIP) and the Fisher effect (FE) hypothesis. The analysis is performed using the recently developed ARDL bounds testing approach to cointegration which can be applied regardless of whether the underlying time series are individually I(1) or I(0). The validity of the theoretical hypotheses is tested for the British Pound, Japanese Yen and Canadian Dollar (relative to the US$) over the period 1988-2004. The results provide support for the empirical verification of a number of long-run relationships and also reveal some causality dynamics between the exchange rates and their main determinants in the examined open economies. Specifically, we find...
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This paper uses growth accounting in order (i) to compare the long-run macroeconomic performance of three European countries (Greece, Ireland and Sweden) and (ii) to evaluate some possible factors that might account for Greece's... more
This paper uses growth accounting in order (i) to compare the long-run macroeconomic performance of three European countries (Greece, Ireland and Sweden) and (ii) to evaluate some possible factors that might account for Greece's relative income and labor productivity stagnation. Ireland and Sweden provide the basis of comparison as they are often seen by Greek policy makers as benchmarks of how well a relatively small country can do in the European Union. We find that Greece's relative stagnation is primarily due to Total Factor Productivity (TFP) differences. We argue that Greece's TFP gap is likely accounted for by the low degree of openness of the Greek economy.
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Abstract: In Greek economic history EU accession represents a major milestone. Among other effects, it has acted as a catalyst for the country's integration in the international economy. This paper investigates whether this can find... more
Abstract: In Greek economic history EU accession represents a major milestone. Among other effects, it has acted as a catalyst for the country's integration in the international economy. This paper investigates whether this can find a modicum of empirical verification ...
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This paper addresses the saving-investment (SI) correlation for the EU15 member countries, using the ARDL approach and panel regressions. If we accept the FeldsteinHorioka [Feldstein, M. and C. Horioka, 1980, Domestic saving and... more
This paper addresses the saving-investment (SI) correlation for the EU15 member countries, using the ARDL approach and panel regressions. If we accept the FeldsteinHorioka [Feldstein, M. and C. Horioka, 1980, Domestic saving and international capital flows, ...
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The nexus between economic growth and military expenditure has attracted considerable attention and has been the subject of extensive theoretical and empirical work. Given the move towards the development of a Common European Security and... more
The nexus between economic growth and military expenditure has attracted considerable attention and has been the subject of extensive theoretical and empirical work. Given the move towards the development of a Common European Security and Defence Policy (CESDP), this paper, using panel data analysis, addresses the causal ordering issue between growth and defence spending in the case of the European Union (EU15). Results reported herein suggest the presence of a positive feedback between growth and military expenditure in the long run and a positive impact of the latter on growth in the short run.
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Most studies indicate the violation of the Uncovered Interest Parity (UIP) restrictions, and indeed, there are many who find a statistically significant and negative interest rate differential slope. This finding has now become known in... more
Most studies indicate the violation of the Uncovered Interest Parity (UIP) restrictions, and indeed, there are many who find a statistically significant and negative interest rate differential slope. This finding has now become known in international economics as the UIP puzzle. Using recent data on four major currencies vis-à-vis the US dollar and employing the Generalized Method of Moments (GMM)