ulgaria, Croatia, Estonia, Latvia, Lithuania, Hungary, Poland, Czech Republic, Romania, Slovenia, and Slovakia have all benefited from an increase of European Union capital transfers of funds since the demand for European integration. At the same time, foreign direct investments have risen, mainly due to the liberalisation of capital movements. The effects of those funds and the reduction of financial costs can be considered as analogous to the phenomenon known as Dutch Disease. That is to say, the inflow of financial transfers is also considered a curse. In order to eliminate this curse we must take into account the two effects associated with Dutch Disease: the ‘spending effect’ and the ‘resource movement effect’. Public policies have not been appropriate and have not prevented the real exchange rate appreciation, thereby contributing to a poor performance in terms of competitiveness and economic growth. After a descriptive analysis of some variables, we estimate a set of equations that take account of the direct and indirect effects of European Union funds and financial costs on the economy where the effects on the real exchange rate play the major role.

This paper analyses the price discovery process in the USD/Bitcoin market since the Mt.Gox bankruptcy until the aftermath of the hack attack on Bitfinex (01-Mar-2014 until 30-Nov-2016). The Geweke feedback measures, estimated pairwise using hourly returns, show that there is a positive relationship between the total feedback and market share, measured by trading volume, that most of the information is transmitted between exchanges within an hour, at least for the main four exchanges (Bitfinex, Bitstamp, BTC-e and ItBit), while lagged feedback runs mainly from the major exchange. Other minor exchanges seem to react to price information with some delay and are thus considered as merely satellite exchanges. Bitfinex stands out as the most important exchange in transmitting information to the market: the relative importance of the lagged feedback from Bitfinex to the market is 18.29% while the lagged feedback from the market to Bitfinex accounts only for 0.60% of the total feedback. The volatility in the major exchange in each pair is the main factor explaining the feedback measures, sustaining the claim that the information-based component of volatility increases with the relative dimension of the exchange.  

The purpose of this paper is to describe the evolution of China’s exchange rate policy, relate it to the international competitiveness of the Chinese economy and assess the claims that China has been manipulating the exchange rate to foster its competitiveness. We begin by reviewing the historical evolution of China’s exchange rate policy. We then describe the implications of the constraint represented by the “trilemma” (or “impossible trinity”) of international economics for China’s economic policy. We assess whether the Renminbi can meet the requirements to be considered an international reserve currency. We also propose to evaluate the degree of currency manipulation by looking at the magnitude of the exchange rate forecast errors. Our interpretation of the test is that currencies subject to higher degrees of manipulation should be easier to forecast. We find that the magnitude of the forecast errors associated with the Chinese currency’s exchange rate is not noticeably smaller than the magnitudes observed for other currencies. This leads us to conclude that our test does not corroborate the view that China is a notorious currency manipulator. Countries wishing to improve their international competitiveness may therefore look to China’s history for insights. However, it is unlikely that policies oriented to setting the exchange rate to artificial values will find support in China’s exchange rate policy in recent years. Our conclusion runs counter the common view on China’s exchange rate policy.

Two main issues, closely related to each other, have occupied the European Central Bank in recent years: the sovereign debt crisis and the possibility of deflation in the Euro Zone. In this paper we discuss the causes, the consequences and the policy options regarding deflation. In addition, we assess the magnitude of the risk of deflation in the Euro Zone. For this purpose, we will employ the methodology of Kilian and Manganelli (2007). Our results suggest that the threat of deflation in the Euro Zone is related to the international financial crisis and to the sovereign debt crisis in Europe. Thus, the probability of deflation in the Euro zone increased in recent years. Nevertheless, it appears to have subsided in 2017, justifying the view taken by the ECB’s Governing Council, according to which deflation is no longer a problem for the Euro zone.

This paper investigates the information transmission between the most important cryptocurrencies - Bitcoin, Litecoin, Ripple, Ethereum and Bitcoin Cash. We use a VAR modelling approach, upon which the Geweke’s feedback measures and generalized impulse response functions are computed. This methodology allows us to fully characterize the direction, intensity and persistence of information flows between cryptocurrencies. At this data granularity, most of information transmission is contemporaneous. However it seems that there are some lagged feedback effects, mainly from other cryptocurrencies to Bitcoin. The generalized impulse-response functions confirm that there is a strong contemporaneous correlation and that there is not much evidence of lagged effects. The exception appears to be related to the overreaction of Bitcoin returns to contemporaneous shocks.

The purpose of this paper is to study the relation between Portuguese exports of goods and a set of variables that theoretical models suggest as the main determinants of export behavior. Given that the exchange rate is one of the key variables identified by the theoretical models, we begin by reviewing the evolution of Portugal’s exchange rate policy between the 1977 and 1999, when Portugal joined the European Monetary Union. In addition, we discuss how the exchange rate policy has been related to the issue of competitiveness of Portuguese firms. We then present the theoretical models and proceed to an empirical analysis of their adequacy. The results of our empirical analysis indicate that the perfect competition model does not provide an acceptable representation of the behavior of Portugal's exports of goods. The results improve when the monopolistic competition model is estimated. The estimation of a modified version of the monopolistic competition model suggests that Portugal's exports of goods are very elastic with respect to demand and productivity, but very inelastic with respect to wages. Nevertheless, certain variables are not significant, which indicates that there are problems to be solved either in the theoretical framework or in the empirical approach. The estimates reported support the conclusion that to foster exports a focus on wage costs and on exchange rate fluctuations is probably inefficient or even misguided. Productivity and demand seem to be more important determinants of exports. If one believes in this conclusion, then views

At the time of joining the European Economic Community (precursor to the European Union) and the Eurozone, Portuguese agents were very optimistic about the level of development that the country would be able to achieve as a result of being a member of those economic areas. In this paper we describe the changes occurred in the Portuguese economy since joining the European Union and later the Eurozone. In addition, we provide estimates of the evolution of the expectations of Portuguese agents with respect to long-term real per capita GDP, based on a simple intertemporal macroeconomic model. Over the period under analysis, there was an impressive progress in standards of living. Before joining the euro, Portuguese agents were optimistic about long-term income. Expectations remained high until the onset of the debt crisis, at which time expectations collapsed. A slow recovery is visible in our estimates for the most recent years.

The aim of this paper is to analyze the performance of several models for forecasting exports. We collected data on Portugal’s real exports of goods and on the variables suggested by models based on the assumption of perfect competition and of monopolistic competition. We estimated Vector Autoregressive (VAR) models with those variables and compared the performance of the forecasts produced by those models with the forecasts obtained from simpler, univariate models, namely ARIMA models and Holt’s linear trend model. We consider four alternative frameworks in which the forecasts might be produced. These scenarios correspond to “static forecasts”, “recursive forecasts”, “dynamic forecasts” and “dynamic forecasts with known exogenous variables”. We also consider the computation of recursive forecasts including dummies related to the international financial crisis. The best model (according to the root mean squared error of the forecasts in the period since the start of the international financial crisis) depends on the scenario considered for the computation of the forecasts. The theory-based models do not produce forecasts that are clearly better than the forecasts produced by the simpler univariate models. In addition, the impact of the international financial crisis appears to be better represented by a temporary shock than by a permanent shock (with a constant effect). The results cast doubts on the relevance of traditional measures of competitiveness for the evolution of exports. As a consequence of the above, it is not clear that discussions of competitiveness that put the emphasis on costs, namely on wages, or on the exchange rate provide useful guides to policy.

Making use of a two-country, two-sector, New Keynesian model with essential and non-essential goods we assess the macroeconomic consequences of a labor supply shock in the Euro Area. Our model incorporates health status in the households' maximization problem which depends on the time devoted to leisure. Health status is linked to the consumption of non-essential goods, such that the demand for non-essentials is decreasing with contemporaneous health. After calibrating the model for the case of Portugal and the rest of the Euro Area, our simulations show that, a labor supply shock affecting only the latter, reduces the demand for non-essential goods, generates inflation in the Portuguese economy and pushes both regions into economic recession, depriving households from essential goods. If the labor supply shock affects both economies, the negative income effect dominates the decreased demand effect for non-essential goods and that stagflation is a plausible scenario. In addition, our calibration scheme allows us to conclude that the asymmetric effects across economies may be due to different price rigidities between sectors and to different production structures between countries.

The degree of co-movement between currencies remains an important subject for international trade and monetary integration across countries. However, the economic literature has given limited answers about the directional relationships among currencies, and whether they have a leader or a driver. Using the Hodrick-Prescott filter and the wavelet methodology, this paper analyzes exchange rate synchronization for a set of twelve currencies belonging to different  monetary areas covering the period between January 1980 and July 2020. The empirical results reveal that: i) the U.S. dollar still plays an essential role as a foreign exchange anchor; ii) the euro shows an out-of-phase relationship with the vast majority of currencies, including with the other European currencies; iii) the British pound seems to have departed significantly  from the European single currency; iv) the Brazilian real leads the Chinese yuan for most of the sample, and both currencies record great dissimilarities with the other currencies; v) in the absence of short-term foreign exchange market frictions, average bilateral distances between currencies are smaller, and vi) during the international financial crisis, exchange rates became more synchronized.

The aim of this paper is to analyze the macroeconomic impacts of the Covid-19 pandemic in the European Union (27 countries) and, particularly, in four of its economies – Germany, Spain, Italy and Portugal. For this purpose, a counterfactual analysis was conducted based on an ARIMA forecasting model through which the behavior of a set of macroeconomic variables (Gross Domestic Product, public debt, inflation rate, public deficit, and unemployment rate) is examined in the context of the Covid-19 pandemic against a hypothetical scenario without pandemic. In general, the results point to a significantly better performance of all variables in the four countries and in the European Union if the Covid-19 pandemic had not existed. In a scenario without the Covid-19 pandemic, all countries would have achieved higher product levels, showing, however, relatively weaker economic growth rates when compared to the pandemic situation, namely in 2021 and 2022. The results also point to budget surpluses in Germany and Portugal, in 2020, 2021 and 2022, as well as a sharp reduction (over 20 percentage points) in Spanish public debt. In 2021 and 2022, there is also a lower inflationary pressure for the European Union, Germany, Spain and Italy, after a very sharp rise in prices in 2020. Regarding the labor market, with the exception of Germany and European Union, where the unemployment rate would be relatively higher, especially in 2022, and the remaining countries would register lower unemployment rates.

This paper provides new empirical evidence on entry and competition in the Portuguese market of retail pharmacies after its deregulation in 2004. We estimate the market-size thresholds required for pharmacies to enter the market and analyse the toughness of competition in the market. There are three main findings in the paper. First, entry thresholds decreased over the years, which led to better coverage and availability of pharmaceutical services. Second, the toughness of competition among pharmacies increased and the deregulation of over-the-counter drug sales contributed to the expansion of services provided by pharmacies. Third, population restrictions that prevailed in the market were too restrictive and should be reconsidered by regulation authorities.

This paper analysis and compares the volatility of seven cryptocurrencies – Bitcoin, Dogecoin, Ethereum, BitcoinCash, Ripple, Stellar and Litecoin – to the volatility of seven centralized currencies – Yuan, Yen, Canadian Dollar, Brazilian Real, Swiss Franc, Euro and British Pound. We estimate GARCH models to analyze their volatility. The results point to a considerably high volatility of cryptocurrencies when compared to that of centralized currencies. Therefore, we conclude that cryptocurrencies still fall far short of fulfilling all the requirements to be considered as a currency, specifically regarding the functions of store of value and unit of account.