Gwen Eudey

Georgetown University, Washington, Washington, D.C., United States

Are you Gwen Eudey?

Claim your profile

Publications (9)0.63 Total impact

  • [Show abstract] [Hide abstract]
    ABSTRACT: The paper examines a long–run (neoclassical) framework in which differences in productivity growth across sectors and countries lead to inflation differentials. In a currency union, these inflation differentials imply cross–country differentials in real interest rates. The authors estimate the likely size of these differentials for European Union countries, discuss the potential costs of persistent inflation differentials, and comment on the conflicts they may cause within Economic and Monetary Union (EMU). The analytical framework is a variant of the Balassa–Samuelson “productivity hypotheisis,” which relates sectoral productivity trends to trends in the relative price of home goods.
    Review of International Economics 08/2002; 10(3). · 0.63 Impact Factor
  • Source
    Gwen Eudey, Miguel Molico
    [Show abstract] [Hide abstract]
    ABSTRACT: Recent empirical work reveals considerable heterogeneity in the use of technologies within industries, suggesting technology adoption depends on factors other than industry type. We present a model in which the factors that lead to heterogeneous technology adoption play a key economic role in explaining other aspects of the U.S. economy that have been the focus of recent theoretical work, including wage and technology dispersion within and between skill groups and the U-shaped pattern of measured productivity that many other researchers have attributed to learning economies or to production externalities.
    Board of Governors of the Federal Reserve System (U.S.), Finance and Economics Discussion Series. 01/2001;
  • Source
    Gwen Eudey, Roberto Perli
    [Show abstract] [Hide abstract]
    ABSTRACT: In this paper the authors argue that a plausible reason why output and other major U.S. macroeconomic time series seem to follow a Markov switching process might be strictly related to expectations. The authors show that a time series of expectations of future output from the Survey of Professional Forecasters is the only one among the many they analyze that has switching properties compatible with those of output. Starting from this empirical evidence the authors present a business cycle model with shocks to expectations (sunspots) that produces time series with the same properties as the U.S. data.
    02/1999;
  • Source
    [Show abstract] [Hide abstract]
    ABSTRACT: The price of home goods relative to traded goods has risen faster in countries like Belgium, Italy, and Spain than it has in Germany. The observed relative-price trends are in line with sectoral trends in relative labor productivity. A neoclassical model with marginal-cost pricing, long run labor mobility within each country, and long-run PPP in the traded sector can account for the observed trends. As long as the productivity trends continue, countries like Belgium, Italy and Spain will experience equilibrium real appreciations against Germany and will have lower equilibrium real interest rates compared to Germany. Convergence in national inflation rates would require nominal appreciations against the DM to avoid competitiveness problems. In a monetary union, the equilibrium real appreciations and real interest-rate differentials can only come out in inflation differentials. The implied inflation differentials are five to ten times larger than those implied by differences in productivity trends across US regions.
    07/1998;
  • Source
    Gwen Eudey
    [Show abstract] [Hide abstract]
    ABSTRACT: On January 1, 1999, 11 European countries will officially become a monetary union with one currency, the euro. Forming a monetary union brings benefits, such as increased trade between countries. But it carries costs as well. To join the union, each country must cede its right to set individual monetary and exchange-rate policies. Yet each country’s economic situation may differ from that of its fellow union members. How will these countries--and the union--fare when economic shocks hit, especially shocks that affect one country or region more than another? In this article, Gwen Eudey weighs the benefits and costs of European monetary union and discusses some of the issues involved.
    Business Review. 02/1998;
  • Source
    [Show abstract] [Hide abstract]
    ABSTRACT: Recent studies on irreversible investment literature suggest that levels of interest rates and tax rates are relatively less important than various uncertainty measures as determinants of aggregate investment. We attempt to find empirical evidence that aggregate uncertainty and, in particular, variability of inflation as an index of instability matters in aggregate investment decisions. We first follow the methodology of Solimano and Pindyck and, using cross-sectional data for nine OECD countries, observe very low cross-section correlation of inflation volatility and marginal profitability of capital volatility. When we allow for time-varying uncertainty and model it as a GARCH process, we uncover that volatility of marginal profitability of capital indeed changes over time and that GARCH processes of marginal profitability and inflation are the same for eight out of nine OECD countries in the sample. This suggests that the threshold required rate of return and the uncertainty proxied by the volatility of inflation are correlated and that they are moving over time. We conclude by noting the inadequacy of cross-sectional analysis for the testing the implications of the model when uncertainty follows a stochastic process.
    Bogazici Journal: Review of Social. 01/1998; 12:57-74.
  • Source
    Gwen Eudey
    [Show abstract] [Hide abstract]
    ABSTRACT: This paper proposes evaluating the assumptions of the RBC model rather than merely the ability of model-constrained data to mach moments of official data counterparts. Reduced-form relationships can be used to create model-consistent derivations of capital and labor input. Since several relationships exist for each input, comparison of their properties highlights weaknesses and strengths in the model assumptions. Applied to the RBC model with factor hoarding and depreciation through use, the approach highlights weaknesses in the standard utility function and casts doubt upon use of the model to improve official capital stock measures or utilization rates.
    Federal Reserve Bank of Philadelphia, Working Papers. 01/1997;
  • M.B. Canzoneri, B. Diba, G. Eudey
    [Show abstract] [Hide abstract]
    ABSTRACT: Inflation has fallen dramatically in countries like Spain and Italy over the last decade, but the rate of increase in "home good" prices remains stubbornly higher than the rate of increase in "traded good" prices. The paper begins by showing that this discrepancy can be explained (at least in part) by trends in productivity; average labour productivity has grown much more slowly in the home good sector in these countries. The paper goes on to investigate the implications of productivity trends for the consistency of the Maastricht convergence criteria an for the differences in nation inflation rates after EMU.
    02/1996;
  • [Show abstract] [Hide abstract]
    ABSTRACT: In this paper we focus on cycles and trends of some macroeconomic and housing market variables representative of the French economy. In a first part, we empirically show that cycles in the housing sector, measured by housing prices, housing starts, building permits, sales or residential investment, are strongly correlated to GDP cycles with a lead lying between of one and four quarters, suggesting thus that a monitoring of housing fluctuations could bring useful information for macroeconomic forecasting. Interestingly, this result is robust to the various considered approaches. Moreover, it seems that the housing sector long-term trend possesses its own dynamics, quite different from the global French economic activity. Thus, in a second part, we review various structural factors that could drive housing market developments in France in the future.
    Banco de Espa�a, Banco de Espa�a Working Papers. 01/1996;