Browsing by Author "Berka M"

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    Real exchange rates and sectoral productivity in the Eurozone
    (1/06/2018) Berka M; Devereux M; Engel C
    We investigate the link between real exchange rates and sectoral total factor productivity measures for countries in the Eurozone. Real exchange rate patterns quite closely accord with an amended Balassa-Samuelson interpretation both in the cross-section and time series. We use a sticky price dynamic general equilibrium model to generate a cross-section and time series of real exchange rates that can be compared to the data. Under the assumption of a common currency, the model simulations closely accord with the empirical estimates for the Eurozone. Our findings contrast with previous studies that have found little relationship between productivity levels and the real exchange rate among high-income countries, but those studies have included country pairs which have a floating nominal exchange rate.
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    The Basel Accord and Financial Intermediation: The Impact of Policy
    (Federal Reserve Bank of St Louis, 16/04/2018) Berka M; Zimmermann C
    This article studies loan activity in a context where banks have to follow Basel Accord–type rules and find financing with the households. Loan activity typically decreases when investment returns of entrepreneurs decline, and we study which type of policy could invigorate an economy in a trough. The authors find that an active monetary policy increases loan volume even when the economy is in good shape, while the introduction of an active capital requirement policy is also effective if it implies tightening of regulation in bad times. This is performed with a heterogeneous agent economy with occupational choice, financial intermediation, and aggregate shocks to the distribution of entrepreneurial returns.