Portuguese Economic Journal, 2011, Volume 10, Nº 1
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- Trade policy in the face of price and non-price strategiesPublication . Khatibi, Arastou; Vergote, WouterWhen selling their products domestically or internationally, firms rely on more than just price as a strategic variable. They also rely on non- price instruments such as advertising and/or R&D investments. Any trade policy that affects or limits the use of one variable will likely have strategic consequences for the use of all the others. Using a Hotelling model with vertical differentiation we focus on how trade policy barriers alter price and non-price competition on the goods market. The main results are as follows: first, no matter whether the trade restriction (tariff) is placed on the non-price instrument or on the good itself, the foreign (domestic) firm prefers to increase (decrease) its use of its pricing tool and give up some of (increase) its use of the non-price instrument. Second, in the presence of a non-price instrument, tariffs do not always lead both firms to increase their price: it can lead the foreign firm to decrease its (final) price.
- Agricultural trade liberalization under bilateralism : an international network perspectivePublication . May, Daniel E.Global negotiations in agricultural trade have been considered unsuccessful. Given this fact, the paper studies whether bilateral agreements, rather than global agreements, can lead to Agricultural Global Free Trade by means of decoupled and compensatory payments. For this purpose, the new advances of the international trade network literature have beenadopted.
- International macroeconomic interdependence and imports of oil in a small open economyPublication . Sousa, TeresaTo the extent that oil imports may be relevant to the international dimension of policy, we study the transmission of shocks to open economies dependent on oil within a NOEM framework through a DSGE model of a small open economy with flexible prices, staggered price setting and local currency pricing. For this purpose we introduce imports of oil as a new intermediate good needed to produce the final good and, apart from the usual exogenous shocks when a small open economy is being modeled, we consider an uncovered interest-rate parity shock, a technology shock and an oil price shock. A second-order accurate solution method is used to solve numerically a calibrated model for Portugal and Spain and the simulation results are compared with historical data, showing similar volatilities and expected dynamic responses to exogenous shocks. The model is computed with an optimized Taylor-style interest rate rule that includes real exchange targeting, thus arguing in favour of an international dimension of monetary policy.
- The macroeconomic effects of fiscal policy in Portugal : a Bayesian SVAR analysisPublication . Afonso, António; Sousa, Ricardo M.With a new quarterly dataset we estimate a Bayesian Structural Autoregression model and a Fully Simultaneous System approach to analyze the macroeconomic effects of fiscal policy. Results show that positive government spending shocks, in general, have a negative effect on real GDP; lead to “crowding-out” effects of private consumption and investment; have a persistent and positive effect on the price level and a mixed impact on the average financing cost of government debt. Explicitly considering the government debt dynamics in the model is also important. A VAR counter- factual exercise confirms that unexpected positive spending shocks create relevant “crowding-out” effects.