According to the traditional theory, an exchange rate depreciation usually implies a real currency depreciation which increases the volume of exports. At least four conditions have to be verified for this effect to be observed: (1) The depreciation is not transmitted to domestic prices, (2) export prices are set in the exporter’s currency, (3) the foreign demand is sufficiently elastic (Marshall-Lerner condition), and (4) exporter’s supply is sufficiently elastic too.
This paper does not study the existence of those conditions, since previous studies have shown that they are likely to be observed. Nevertheless, several recent papers have underlined the non systematic character of the existence of J-Curve or competitiveness effect. Duttagupta and Spilimbergo (2004) study the Asian 1997-1998 currency crises and show that exports did not increase during this period. More generally, recent crises events (Argentina and Uruguay, 2002, Brazil 1999) underline this lack of reaction of exports to exchange rate shocks. Our study attempts to explain these stylized facts by studying the existing interactions between financial imperfections, exchange rate movements and the volume of exports. We show that, even if the four previous conditions are verified, a depreciation will have a less positive - or even a negative impact on exports, if financial market imperfections are present in the economy. Moreover, we also show that countries’ specialization and the depreciation’s magnitude may have to be taken into account to explain why the traditional competitiveness effect is not always observed.
In an attempt to reach a better understanding of the properties and critical behavior of non-equilibrium systems, we investigate the steady state properties of three simple models, variations of the prototype, the driven Ising lattice gas. Our first system studied is the bilayer model, a stack of two driven Ising lattice gases allowed to interact. We study this model using a very simple analytic approximation, the high temperature expansion. Building on existing simulation data and field theory results, our goal is to test how faithfully the series expansion can reproduce the Monte Carlo phase diagram. We find that the agreement between our calculations and the already reported simulations results is remarkably good. Next, we investigate the critical behavior of a two-dimensional Ising lattice gas driven into a non-equilibrium steady state, subject to a local modification of the dynamics, namely, having anisotropic attempt frequencies for exchanges along different spatial directions.
The recent financial crisis caused by a collapse of the housing market propelled the U.S. economy into the Great Recession. A notable development during the crisis period was a slump in business investment in tandem with a sharp decline in land prices (Figure 1). The crisis has generated substantial interest in understanding the links between the housing market and the macroeconomy. Although it is widely accepted that house prices could have an important influence on macroeconomic fluctuations, quantitative studies in a general equilibrium framework have been scant.
