Pub Date : 2025-12-01Epub Date: 2025-10-13DOI: 10.1016/j.jinteco.2025.104175
Silvia Marchesi , Giovanna Marcolongo
This paper investigates the relationship between financial crises in developing countries and variation of bank deposits in offshore financial centers. Using a stacked difference-in-differences estimator, we find that three years after the onset of the crisis, bank deposits in tax havens increase by almost 30 percent. The effect appears independent of tax rates and is primarily driven by countries with weak institutions. We add to the literature on tax havens as we find that they not only facilitate tax evasion and corruption in “normal times”, but also absorb resources during financial crises, when most needed.
{"title":"Knockin’ on H(e)aven’s door. Financial crises and offshore wealth","authors":"Silvia Marchesi , Giovanna Marcolongo","doi":"10.1016/j.jinteco.2025.104175","DOIUrl":"10.1016/j.jinteco.2025.104175","url":null,"abstract":"<div><div>This paper investigates the relationship between financial crises in developing countries and variation of bank deposits in offshore financial centers. Using a stacked difference-in-differences estimator, we find that three years after the onset of the crisis, bank deposits in tax havens increase by almost 30 percent. The effect appears independent of tax rates and is primarily driven by countries with weak institutions. We add to the literature on tax havens as we find that they not only facilitate tax evasion and corruption in “normal times”, but also absorb resources during financial crises, when most needed.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"158 ","pages":"Article 104175"},"PeriodicalIF":4.0,"publicationDate":"2025-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145332943","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-12-01Epub Date: 2025-09-13DOI: 10.1016/j.jinteco.2025.104169
Georgios Georgiadis, Marek Jarociński
We estimate international spillovers from both conventional and unconventional US monetary policy. We use novel measures of exogenous variation in conventional policy, forward guidance and large-scale asset purchases (LSAPs), based on high-frequency asset price surprises around a broad set of Federal Reserve communications. The identification relies on relatively weak assumptions and accounts for potential endogenous policy components – including central bank information effects – in these asset price surprises. We find that: (i) conventional policy, forward guidance and LSAPs all generate large and comparable spillovers; (ii) these spillovers transmit through trade and financial channels to a similar extent; (iii) LSAPs trigger immediate international portfolio rebalancing between US and foreign bonds that are relatively close substitutes, but they produce only limited spillovers in term premia; (iv) all Fed policy measures create trade-offs for emerging market monetary policy between stabilizing output and prices vs. ensuring financial stability, particularly with regard to capital inflows.
{"title":"Global spillovers from multi-dimensional US monetary policy","authors":"Georgios Georgiadis, Marek Jarociński","doi":"10.1016/j.jinteco.2025.104169","DOIUrl":"10.1016/j.jinteco.2025.104169","url":null,"abstract":"<div><div>We estimate international spillovers from both conventional and unconventional US monetary policy. We use novel measures of exogenous variation in conventional policy, forward guidance and large-scale asset purchases (LSAPs), based on high-frequency asset price surprises around a broad set of Federal Reserve communications. The identification relies on relatively weak assumptions and accounts for potential endogenous policy components – including central bank information effects – in these asset price surprises. We find that: (i) conventional policy, forward guidance and LSAPs all generate large and comparable spillovers; (ii) these spillovers transmit through trade and financial channels to a similar extent; (iii) LSAPs trigger immediate international portfolio rebalancing between US and foreign bonds that are relatively close substitutes, but they produce only limited spillovers in term premia; (iv) all Fed policy measures create trade-offs for emerging market monetary policy between stabilizing output and prices vs. ensuring financial stability, particularly with regard to capital inflows.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"158 ","pages":"Article 104169"},"PeriodicalIF":4.0,"publicationDate":"2025-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145107354","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-12-01Epub Date: 2025-09-29DOI: 10.1016/j.jinteco.2025.104171
John Finlay , Trevor C. Williams
Skilled workers’ incomes have pulled away from those of unskilled workers in recent decades, reflecting increasing skill bias in production. How has this changed the spatial distribution of skill? We show nonhomothetic housing demand connects aggregate income inequality to spatial sorting. A household’s skill level determines its income, and therefore its housing expenditure share, sensitivity to housing costs, and location preferences. The result is spatial sorting by skill. Moreover, diverging incomes cause diverging location choices. Using consumption microdata, we estimate that housing is a necessity. Increasing total expenditure by 10% reduces housing expenditure shares by 2.5%. Skilled workers therefore sort into expensive cities, and by raising their relative incomes, increases in aggregate skill bias intensify sorting. Embedding our estimated preferences in a quantitative spatial model, we find that without rising aggregate skill bias, spatial sorting would have grown one quarter less since 1980.
{"title":"Housing demand, inequality, and spatial sorting","authors":"John Finlay , Trevor C. Williams","doi":"10.1016/j.jinteco.2025.104171","DOIUrl":"10.1016/j.jinteco.2025.104171","url":null,"abstract":"<div><div>Skilled workers’ incomes have pulled away from those of unskilled workers in recent decades, reflecting increasing skill bias in production. How has this changed the spatial distribution of skill? We show nonhomothetic housing demand connects aggregate income inequality to spatial sorting. A household’s skill level determines its income, and therefore its housing expenditure share, sensitivity to housing costs, and location preferences. The result is spatial sorting by skill. Moreover, diverging incomes cause diverging location choices. Using consumption microdata, we estimate that housing is a necessity. Increasing total expenditure by 10% reduces housing expenditure shares by 2.5%. Skilled workers therefore sort into expensive cities, and by raising their relative incomes, increases in aggregate skill bias intensify sorting. Embedding our estimated preferences in a quantitative spatial model, we find that without rising aggregate skill bias, spatial sorting would have grown one quarter less since 1980.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"158 ","pages":"Article 104171"},"PeriodicalIF":4.0,"publicationDate":"2025-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145268068","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-12-01Epub Date: 2025-10-13DOI: 10.1016/j.jinteco.2025.104179
Emilio César Espino , Julian Kozlowski , Fernando M. Martin , Juan M. Sánchez
Emerging economies have adopted fiscal and monetary rules to discipline government policy. We study the value and macroeconomic implications of rules and flexibility within a sovereign-default model that incorporates domestic fiscal and monetary policies and long-term external debt. Adopting monetary targets and debt limits during normal times yields welfare gains. Suspending rules can significantly influence policy, macroeconomic outcomes, and welfare during large, unforeseen crises. The gains from flexibility depend on how quickly policymakers are able to reimpose rules after the crisis.
{"title":"Policy rules and large crises in emerging markets","authors":"Emilio César Espino , Julian Kozlowski , Fernando M. Martin , Juan M. Sánchez","doi":"10.1016/j.jinteco.2025.104179","DOIUrl":"10.1016/j.jinteco.2025.104179","url":null,"abstract":"<div><div>Emerging economies have adopted fiscal and monetary rules to discipline government policy. We study the value and macroeconomic implications of rules and flexibility within a sovereign-default model that incorporates domestic fiscal and monetary policies and long-term external debt. Adopting monetary targets and debt limits during normal times yields welfare gains. Suspending rules can significantly influence policy, macroeconomic outcomes, and welfare during large, unforeseen crises. The gains from flexibility depend on how quickly policymakers are able to reimpose rules after the crisis.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"158 ","pages":"Article 104179"},"PeriodicalIF":4.0,"publicationDate":"2025-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145332942","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We show that short-term liquidity can be a source of competitive advantage by enabling firms to invest in intangible assets. Our analysis leverages a French reform that capped payment delays in trade credit contracts, which generated quasi-experimental variation in corporate liquidity across manufacturing firms. Higher liquidity led to significantly greater investment in intangibles, which, in turn, raised markups and market shares. These results suggest a strategic role for liquidity in shaping firm performance, indicating that initial financial conditions can have lasting effects on productivity and market structure.
{"title":"Liquidity as competitive advantage: The role of intangibles","authors":"Carlo Altomonte , Monica Morlacco , Tommaso Sonno , Domenico Favoino","doi":"10.1016/j.jinteco.2025.104168","DOIUrl":"10.1016/j.jinteco.2025.104168","url":null,"abstract":"<div><div>We show that short-term liquidity can be a source of competitive advantage by enabling firms to invest in intangible assets. Our analysis leverages a French reform that capped payment delays in trade credit contracts, which generated quasi-experimental variation in corporate liquidity across manufacturing firms. Higher liquidity led to significantly greater investment in intangibles, which, in turn, raised markups and market shares. These results suggest a strategic role for liquidity in shaping firm performance, indicating that initial financial conditions can have lasting effects on productivity and market structure.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"158 ","pages":"Article 104168"},"PeriodicalIF":4.0,"publicationDate":"2025-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145119629","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-12-01Epub Date: 2025-09-03DOI: 10.1016/j.jinteco.2025.104157
Piergiorgio Alessandri , Haroon Mumtaz
We study the impact of temperature risk on economic growth exploiting a novel panel VAR model and data on 160 countries since the 1960s. We show that the conditional volatility of annual temperatures – a measure of ex ante temperature risk – varied significantly over time, with important implications for growth. Controlling for concomitant changes in temperature levels, an exogenous +1 °C increase in temperature risk causes on average a 0.4 per cent decline in GDP growth and a one per cent increase in the volatility of GDP.
{"title":"The macroeconomic cost of temperature risk","authors":"Piergiorgio Alessandri , Haroon Mumtaz","doi":"10.1016/j.jinteco.2025.104157","DOIUrl":"10.1016/j.jinteco.2025.104157","url":null,"abstract":"<div><div>We study the impact of temperature risk on economic growth exploiting a novel panel VAR model and data on 160 countries since the 1960s. We show that the conditional volatility of annual temperatures – a measure of <em>ex ante</em> temperature risk – varied significantly over time, with important implications for growth. Controlling for concomitant changes in temperature levels, an exogenous +1 °C increase in temperature risk causes on average a 0.4 per cent decline in GDP growth and a one per cent increase in the volatility of GDP.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"158 ","pages":"Article 104157"},"PeriodicalIF":4.0,"publicationDate":"2025-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145027848","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-12-01Epub Date: 2025-10-04DOI: 10.1016/j.jinteco.2025.104176
Paolo Varraso
I study the optimal design of fiscal policy, with and without commitment, in collateral-constraint models where the households’ borrowing capacity is linked to the economy’s real exchange rate. When the collateral constraint is binding, increasing public spending raises the real exchange rate and stabilizes private consumption. However, by making potential crises less costly, higher spending also makes borrowing more attractive. I show that the Ramsey-optimal policy entails a commitment to restrict fiscal stimulus during crisis periods, aimed at deterring excessive debt accumulation. In a quantitative application to Argentina, I show that, despite the potential for substantial ex-post gains from stabilizing the real exchange rate, significant fiscal expansions are not optimal because of the borrowing inefficiency.
{"title":"Fiscal policy design in collateral-constraint economies: The role of commitment","authors":"Paolo Varraso","doi":"10.1016/j.jinteco.2025.104176","DOIUrl":"10.1016/j.jinteco.2025.104176","url":null,"abstract":"<div><div>I study the optimal design of fiscal policy, with and without commitment, in collateral-constraint models where the households’ borrowing capacity is linked to the economy’s real exchange rate. When the collateral constraint is binding, increasing public spending raises the real exchange rate and stabilizes private consumption. However, by making potential crises less costly, higher spending also makes borrowing more attractive. I show that the Ramsey-optimal policy entails a commitment to restrict fiscal stimulus during crisis periods, aimed at deterring excessive debt accumulation. In a quantitative application to Argentina, I show that, despite the potential for substantial ex-post gains from stabilizing the real exchange rate, significant fiscal expansions are not optimal because of the borrowing inefficiency.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"158 ","pages":"Article 104176"},"PeriodicalIF":4.0,"publicationDate":"2025-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145268064","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-12-01Epub Date: 2025-10-16DOI: 10.1016/j.jinteco.2025.104173
Stefano Federico, Giuseppe Marinelli, Francesco Palazzo
This paper explores how a demand shock in an export market propagates through the domestic banking system. The 2014 dual shocks of sanctions and falling oil prices significantly reduced sales for Italian exporters to Russia, leading to increased liquidity needs. Banks more exposed to these exporters accommodated their credit demand to address liquidity shortfalls but simultaneously reduced credit supply, especially to ex ante risky borrowers not directly affected by the shock. Our findings suggest a bank capital channel at play, mitigating trade shocks for some firms while transmitting them to the broader economy.
{"title":"Export shocks and banks’ domestic credit: Balancing liquidity provision and risk mitigation","authors":"Stefano Federico, Giuseppe Marinelli, Francesco Palazzo","doi":"10.1016/j.jinteco.2025.104173","DOIUrl":"10.1016/j.jinteco.2025.104173","url":null,"abstract":"<div><div>This paper explores how a demand shock in an export market propagates through the domestic banking system. The 2014 dual shocks of sanctions and falling oil prices significantly reduced sales for Italian exporters to Russia, leading to increased liquidity needs. Banks more exposed to these exporters accommodated their credit demand to address liquidity shortfalls but simultaneously reduced credit supply, especially to ex ante risky borrowers not directly affected by the shock. Our findings suggest a bank capital channel at play, mitigating trade shocks for some firms while transmitting them to the broader economy.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"158 ","pages":"Article 104173"},"PeriodicalIF":4.0,"publicationDate":"2025-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145424723","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-12-01Epub Date: 2025-10-28DOI: 10.1016/j.jinteco.2025.104181
Nicolás E. Magud, Samuel Pienknagura
Using individual-level surveys for 42 countries (advanced economies and emerging markets and developing economies) spanning about 40 years, we show that cohorts with higher exposure to past inflationary episodes systematically express higher concerns over inflation. This link is stronger for women and poorer individuals; when exposure occurs in the latter part of the individual’s working-age (lifecycle theory); and it diminishes with individuals’ trust in institutions. Country characteristics also affect the link between past inflation exposure and inflation concerns—it is amplified by macroeconomic instability, and reduced with institutions’ quality, aggregate income, and democratic development. Higher contemporaneous inflation affects inflation concerns but does not increase the sensitivity of inflation concerns to past experience. In turn, inflation concerns have macroeconomic implications, as inflation expectations are more responsive to inflationary shocks in countries where concerns about inflation are more entrenched. This could potentially affect central banks’ ability to anchor inflation expectations.
{"title":"Inflated concerns: Exposure to past inflationary episodes and preferences for price stability","authors":"Nicolás E. Magud, Samuel Pienknagura","doi":"10.1016/j.jinteco.2025.104181","DOIUrl":"10.1016/j.jinteco.2025.104181","url":null,"abstract":"<div><div>Using individual-level surveys for 42 countries (advanced economies and emerging markets and developing economies) spanning about 40 years, we show that cohorts with higher exposure to past inflationary episodes systematically express higher concerns over inflation. This link is stronger for women and poorer individuals; when exposure occurs in the latter part of the individual’s working-age (lifecycle theory); and it diminishes with individuals’ trust in institutions. Country characteristics also affect the link between past inflation exposure and inflation concerns—it is amplified by macroeconomic instability, and reduced with institutions’ quality, aggregate income, and democratic development. Higher contemporaneous inflation affects inflation concerns but does not increase the sensitivity of inflation concerns to past experience. In turn, inflation concerns have macroeconomic implications, as inflation expectations are more responsive to inflationary shocks in countries where concerns about inflation are more entrenched. This could potentially affect central banks’ ability to anchor inflation expectations.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"158 ","pages":"Article 104181"},"PeriodicalIF":4.0,"publicationDate":"2025-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145424722","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-12-01Epub Date: 2025-10-27DOI: 10.1016/j.jinteco.2025.104183
Seunghoon Na , Yinxi Xie
This paper studies exchange rate dynamics and excess currency returns by incorporating bounded rationality into a small open-economy New Keynesian model. Decision-makers have limited foresight, planning only up to a finite horizon and approximating continuation values with coarse value functions learned from past experiences. This behavior generates an initial underreaction, followed by an overreaction in beliefs, leading to dynamic overshooting of exchange rate forecast errors. Moreover, the coexistence of forward- and backward-looking components in expectation formation breaks the forecast-horizon invariance implied from rational expectations. Our model thus provides a micro-foundation for understanding time- and forecast-horizon variability in uncovered interest parity (UIP) puzzles, and its predictions align closely with empirical estimates.
{"title":"Expectations and the UIP puzzles when foresight is limited","authors":"Seunghoon Na , Yinxi Xie","doi":"10.1016/j.jinteco.2025.104183","DOIUrl":"10.1016/j.jinteco.2025.104183","url":null,"abstract":"<div><div>This paper studies exchange rate dynamics and excess currency returns by incorporating bounded rationality into a small open-economy New Keynesian model. Decision-makers have limited foresight, planning only up to a finite horizon and approximating continuation values with coarse value functions learned from past experiences. This behavior generates an initial underreaction, followed by an overreaction in beliefs, leading to dynamic overshooting of exchange rate forecast errors. Moreover, the coexistence of forward- and backward-looking components in expectation formation breaks the forecast-horizon invariance implied from rational expectations. Our model thus provides a micro-foundation for understanding time- and forecast-horizon variability in uncovered interest parity (UIP) puzzles, and its predictions align closely with empirical estimates.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"158 ","pages":"Article 104183"},"PeriodicalIF":4.0,"publicationDate":"2025-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145474202","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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