WorldCat Identities

Bergin, Paul R.

Works: 55 works in 261 publications in 1 language and 1,709 library holdings
Roles: Author
Classifications: HB1, 330.072
Publication Timeline
Most widely held works by Paul R Bergin
Staggered price setting and endogenous persistence by Paul R Bergin( Book )

16 editions published in 1998 in English and held by 124 WorldCat member libraries worldwide

This paper generates persistent effects of a monetary disturbance in the context of staggered price-setters. Previous research has been restricted by the CES functional form to price-setting rules that are constant markups over marginal costs. The present paper considers a translog form for preferences and an input-output structure for production in the context of a dynamic general equilibrium model of monopolistically competitive staggered price-setters. We derive a price-setting rule that is a function of marginal cost and also competitors' prices. This rule better captures the interaction of price-setters envisioned in Taylor (1980) and Blanchard (1983) in their early work on staggered contracts. The model is able to generate reasonable persistence, and also confirms the conjecture of Taylor and Blanchard that increasing the number of contracting groups increases the degree of persistence
Productivity, tradability and the long-run price puzzle by Paul R Bergin( )

18 editions published in 2004 in English and held by 117 WorldCat member libraries worldwide

Long-run cross-country price data exhibit a puzzle. Today, richer countries exhibit higher price levels than poorer countries, a stylized fact usually attributed to the Balassa- Samuelson' effect. But looking back fifty years, or more, this effect virtually disappears from the data. What is often assumed to be a universal property is actually quite specific to recent times. What might explain this historical pattern? We adopt a framework where goods are differentiated by tradability and productivity. A model with monopolistic competition, a continuum-of-goods, and endogenous tradability allows for theory and history to be consistent for a wide range of underlying productivity shocks
Pricing to market, staggered contracts, and real exchange rate persistence by Paul R Bergin( )

14 editions published in 1999 in English and held by 112 WorldCat member libraries worldwide

This paper offers an explanation for the persistence observed in real exchange rate movements. The model combines pricing to market behavior with sticky prices generated by staggered contracts. A translog preference structure is sued to enhance both features. The paper finds that openness limits the degree of endogenous persistence. Nevertheless, the model under reasonable parameter values can replicate the serial correlation of real exchange rate data. Further, significant exchange rate data. Further, significant exchange rate volatility can be generated, and this is amplified by the presence of endogenous persistence
Towards a theory of firm entry and stabilization policy by Paul R Bergin( )

20 editions published between 2005 and 2006 in English and held by 108 WorldCat member libraries worldwide

This paper studies the role of stabilization policy in a model where firm entry responds to shocks and uncertainty. We evaluate stabilization policy in the context of a simple analytically solvable sticky price model, where firms have to prepay a fixed cost of entry. The presence of endogenous entry can alter the dynamic response to shocks, leading to greater persistence in the effects of monetary and real shocks. Entry affects welfare, depending on the love of variety in consumption and investment, as well as its implications for market competitiveness. In this context, monetary policy has an additional role in regulating the optimal number of entrants, as well as the optimal level of production at each firm. We find that the same monetary policy rule optimal for regulating the scale of production in familiar sticky price models without entry, also generates the amount of (endogenous) entry corresponding to a flex-price equilibrium
Does exchange rate risk matter for welfare? by Paul R Bergin( )

12 editions published in 2003 in English and held by 101 WorldCat member libraries worldwide

Volatility in exchange rates is a prominent feature of open economies, a fact which has motivated elaborate attempts in many countries at exchange rate management. This paper analyzes quantitatively the welfare effects of exchange rate risk in a general two-country environment. It finds that the effects of uncertainty tend to be small for the types of simplified cases considered in past literature. But it identifies other cases, not considered previously, in which these effects can be significantly larger. These include habit persistence, where agents are more sensitive to risk, and also incomplete asset market structures which allow for asymmetries between countries. The latter case suggests that countries which are hosts to an international reserve currency, such as the U.S. or members of the euro zone, may accrue
How well can the new open economy macroeconomics explain the exchange rate and current account? by Paul R Bergin( )

9 editions published in 2004 in English and held by 98 WorldCat member libraries worldwide

This paper advances the new open economy macroeconomic (NOEM) literature in an empirical direction, estimating and testing a two-country model. Fit to U.S and G-7 data, the model performs moderately well for the exchange rate and current account. Results offer guidance for future theoretical work. Parameter estimates lend support to some common assumptions in the theoretical literature, such as local currency pricing and risk sharing. Estimates are found for key parameters commonly calibrated in the theoretical literature, such as the elasticity of substitution between home and foreign composite goods, and the response of a country risk premium to the net foreign asset position. Results also indicate that deviations from interest rate parity are not closely related to monetary policy shocks, as recently hypothesized. Further, results suggest that inserting explicit interest rate parity shocks into a NOEM model may be more helpful in explaining movements in the current account than the exchange rate
Tradability, productivity, and understanding international economic integration by Paul R Bergin( )

12 editions published in 2005 in English and held by 88 WorldCat member libraries worldwide

"This paper develops a two-country macro model with endogenous tradability to study features of international economic integration. Recent episodes of integration in Europe and North America suggest some surprising observations: while quantities of trade have increased significantly, especially along the extensive margin, price dispersion has not decreased and may even have increased. We propose a way of reconciling these price and quantity observations in a macroeconomic model where the decision of heterogeneous firms to trade internationally is endogenous. Trade is shaped both by the nature of heterogeneity--trade costs versus productivity--and by the nature of trade policies--cuts in fixed costs versus cuts in per unit costs like tariffs. For example, in contrast to tariff cuts, trade policies that work mainly by lowering various fixed costs of trade may have large effects on entry decisions at the extensive margin without having direct effects on price-setting decisions. Whether this entry raises or lowers overall price dispersion depends on the type of heterogeneity that distinguishes the new entrants from incumbent traders"--National Bureau of Economic Research web site
Understanding international portfolio diversification and turnover rates by Amir A Amadi( )

9 editions published in 2006 in English and held by 78 WorldCat member libraries worldwide

This paper argues that fixed trading costs in international asset markets help explain equity home bias. This contrasts with explanations prevalent in international macroeconomics, which tend to be based on trading frictions instead in international goods markets, such as nontraded goods or transportation costs. While the stylized fact of high trading turnover in foreign holdings has been interpreted as evidence against international asset trading costs, we show that this argument only applies to costs that are proportional to trade, and not to fixed costs of entering the foreign market. After documenting that the home bias and turnover stylized facts remain valid in recent data, the paper constructs a very simple portfolio allocation model with various configurations of trading costs and with heterogeneous types of traders. A configuration with per unit costs heterogeneous among agents and a homogeneous fixed cost is found to replicate the pair of stylized facts. Intuitively, the lower trading costs that characterize larger and more efficient traders have two implications: firstly, these traders find it more profitable to enter foreign markets; secondly, their lower trading costs encourage a higher rate of trading turnover. Since holdings of international equities are disproportionately dominated by this class of larger and more efficient traders, average trading turnover is higher among international holdings
Outsourcing and volatility by Paul R Bergin( )

10 editions published in 2007 in English and held by 76 WorldCat member libraries worldwide

"While outsourcing of production from the U.S. to Mexico has been hailed in Mexico as a valuable engine of growth, recently there have been misgivings regarding its fickleness and volatility. This paper is among the first in the trade literature to study the second moment properties of outsourcing. We begin by documenting a new stylized fact: the maquiladora outsourcing industries in Mexico experience fluctuations in value added that are roughly twice as volatile as the corresponding industries in the U.S.A difference-in-difference method is extended to second moments to verify the statistical significance of this finding. We then develop a stochastic model of outsourcing with heterogeneous firms that can explain this volatility. The model employs two novel mechanisms: an extensive margin in outsourcing which responds endogenously to transmit shocks internationally, and translog preferences which modulate firm entry."--Abstract
Pass-through of exchange rates and competition between floaters and fixers by Paul R Bergin( )

10 editions published in 2007 in English and held by 75 WorldCat member libraries worldwide

This paper studies how a rise in China's share of U.S. imports could lower pass-through of exchange rates to U.S. import prices. We develop a theoretical model with variable markups showing that the presence of exports from a country with a fixed exchange rate could alter the competitive environment in the U.S. market. In particular, this encourages exporters from other countries to lower markups in response to a U.S. depreciation, thereby moderating the pass-through to import prices. Free entry is found to further moderate the pass-through, in that a U.S. depreciation encourages entry of exporters whose costs are shielded by the fixed exchange rate, which further intensifies the competitive pressure on other exporters. The model predicts that certain conditions are necessary to facilitate this 'China explanation' for falling pass-through, including a 'North America bias' in U.S. preferences. The model also produces a log-linear structural equation for pass-through regressions indicating how to include the China share. Panel regressions over 1993₆1999 support the prediction that a high China share in imports lowers pass-through to U.S. import prices
The dynamic effects of currency union on trade by Paul R Bergin( )

9 editions published between 2010 and 2012 in English and held by 73 WorldCat member libraries worldwide

A currency union's ability to increase international trade is one of the most debated questions in international macroeconomics. This paper studies the dynamics of these trade effects. First, an empirical study of the European Monetary Union finds that the extensive margin of trade (entry of new firms or goods) responds several years ahead of overall trade volume. This implies that the intensive margin (previously traded goods) falls in the run-up to EMU. The paper's theoretical contribution is to study the announcement of a future monetary union as a news shock to trade costs in the context of a dynamic stochastic general equilibrium trade model. Early entry of new firms in anticipation is explainable as a rational forward-looking response under certain conditions, where essential elements include sunk costs of exporting and heterogeneity among firms of a type known before entry. The findings help identify which types of trading frictions are reduced by a currency union. The important role of expectations also indicates that continued gains from EMU depend upon long-term credibility of the union
Exchange rate regimes and the extensive margin of trade by Paul R Bergin( )

10 editions published in 2008 in English and held by 72 WorldCat member libraries worldwide

This paper finds that currency unions and direct exchange rate pegs raise trade through distinct channels. Panel data analysis of the period 1973-2000 indicates that currency unions have raised trade predominantly at the extensive margin, the entry of new firms or products. In contrast, direct pegs have worked almost entirely at the intensive margin, increased trade of existing products. A stochastic general equilibrium model is developed to understand this result, featuring price stickiness and firm entry under uncertainty. Because both regimes tend to reliably provide exchange rate stability over the horizon of a year or so, which is the horizon of price setting, they both lead to lower export prices and greater demand for exports. But because currency unions historically are more durable over a longer horizon than pegs, they encourage firms to make the longer-term investment needed to enter a new market. The model predicts that when exchange rate uncertainty is completely and permanently eliminated, all of the adjustment in trade should occur at the extensive margin
International competitiveness and monetary policy : strategic policy and coordination with a production relocation externality by Paul R Bergin( )

9 editions published in 2013 in English and held by 72 WorldCat member libraries worldwide

Can a country gain international competitiveness by the design of optimal monetary stabilization rules? This paper reconsiders this question by specifying an open-economy monetary model encompassing a "production relocation externality, ' developed in trade theory to analyze the benefits from promoting entry of domestic firms in the manufacturing sector. In a macroeconomic context, this externality provides an incentive for monetary authorities to trade-off output gap with pro-competitive profit stabilization. While helping manufacturing firms to set competitively low prices, optimal pro-competitive stabilization nonetheless results in stronger terms of trade, due to the change in the country's specialization and composition of exports. The welfare gains from international policy coordination are large relative to the case of self-oriented, strategic conduct of stabilization policy. Empirical evidence confirms that the effects of monetary policy design on the composition of trade predicted by the theory are present in data and are quantitatively important
Endogenous nontradability and macroeconomic implications by Paul R Bergin( Book )

11 editions published in 2003 in English and held by 71 WorldCat member libraries worldwide

This paper proposes a new way of thinking about nontraded goods in an open economy macro model. It develops a simple method for analyzing a continuum of goods with heterogeneous trade costs, and it explores the endogenous decision by a seller of whether to trade a good internationally. This way of thinking is appealing in that it provides a natural explanation for a prominent puzzle in international macroeconomics, that the relative price of nontraded goods tends to move much less volatilely than the real exchange rate. Because nontradedness is an endogenous decision, the good on the margin forms a linkage between the prices of traded and nontraded goods, preventing the two price indexes from wandering too far apart. The paper goes on to find that this mechanism has implications for other macroeconomic issues that rely upon the presence of nontraded goods
Mussa redux and conditional PPP by Paul R Bergin( )

8 editions published in 2012 in English and held by 66 WorldCat member libraries worldwide

Abstract: Long half-lives of real exchange rates are often used as evidence against monetary sticky price models. In this study we show how exchange rate regimes alter the long-run dynamics and half-life of the real exchange rate, and we recast the classic defense of such models by Mussa (1986) from an argument based on short-run volatility to one based on long-run dynamics. The first key result is that the extremely persistent real exchange rate found commonly in post Bretton Woods data does not apply to the preceding fixed exchange rate period in our sample, where the half-live was perhaps half as large. This result suggests a reinterpretation of Mussa's original finding, indicating that up to two thirds of the rise in variance of the real exchange rate in the recent period is actually due to the rise in persistence of the response to shocks, rather than due to a rise in the variance of shocks themselves. The second key result explains the rise in persistence over time by identifying underlying shocks using a panel VECM model. Shocks to the nominal exchange rate induce more persistent real exchange rate responses compared to price shocks, and these shocks became more prevalent under a flexible exchange rate regime
The micro-macro disconnect of purchasing power parity by Paul R Bergin( )

9 editions published between 2009 and 2010 in English and held by 63 WorldCat member libraries worldwide

The persistence of aggregate real exchange rates is a prominent puzzle, especially since international relative prices in microeconomic data adjust much faster. This paper finds that adjustment to the law of one price in disaggregated data is not just a faster version of the adjustment to purchasing power parity in the aggregate data; while aggregate real exchange rate adjustment works through the foreign exchange market, microeconomic adjustment works through the goods market. These distinct adjustment dynamics appear to arise from distinct classes of shocks generating micro and macro price deviations. A vector error correction model nesting aggregate and disaggregated relative prices permits identification of distinct macroeconomic and good-specific shocks. When half-lives are estimated conditional on shocks, the macro-micro disconnect puzzle disappears: microeconomic relative prices adjust to macro shocks just as slowly as do aggregate real exchange rates. These results provide evidence against theories of real exchange rate behavior based on sticky prices and on heterogeneity across goods
Financial frictions and firm dynamcis by Paul R Bergin( )

6 editions published in 2014 in English and held by 55 WorldCat member libraries worldwide

Firm entry dynamics are an integral part of the propagation of financial shocks to the real economy. A VAR documents that adverse financial shocks in the U.S. postwar period are associated with a fall in new firm creation and a fall in firm equity values. We propose a DSGE model with endogenous firm entry and financial frictions that is able to explain these facts. The model is novel in giving firms a choice of financing up-front entry costs through a combination of debt as well as equity, so that financial shocks directly impact the financing of firm entry. The model is also novel in making use of the asset pricing implications of the firm entry condition to explain the equity price response to a financial shock. The model indicates that free entry of new firms limits the ability of incumbent firms to respond to negative financial shocks through endogenous capital restructuring. Also, allowing the number of firms to fall after an adverse financial shock is a useful margin of macroeconomic adjustment, reducing the overall impact of the shock on aggregate output. This is because the remaining firms become financially stronger and better able to withstand a financial shock
Multilateral resistance to international portfolio diversification by Paul R Bergin( )

7 editions published in 2012 in English and held by 51 WorldCat member libraries worldwide

Abstract: Not only are investors biased toward home assets, but when they do invest abroad, they appear to favor countries with returns more correlated with home assets, reducing diversification yet further. This paper argues that understanding this correlation puzzle requires a multi-county theoretical perspective, and we construct an N-country DSGE model that allows for heterogeneous stock return correlations. It shows that bilateral asset holdings depend not only upon the stock return correlation with the destination country, but also on the correlation with all other countries. This effect is analogous to 'multilateral resistance' in the trade literature. An empirical study controlling for this multilateral resistance in correlations overturns the result of preceding literature, finding that higher stock return correlation lowers bilateral equity asset holdings as theory predicts, reducing the losses of home bias
"Conditional PPP" and Real Exchange Rate Convergence in the Euro Area by Paul R Bergin( )

6 editions published in 2016 in English and held by 48 WorldCat member libraries worldwide

While economic theory highlights the usefulness of flexible exchange rates in promoting adjustment in international relative prices, flexible exchange rates also can be a source of destabilizing shocks. We find that when countries joining the euro currency union abandoned their national exchange rates, the adjustment of real exchange rates toward purchasing power parity (PPP) became faster. To disentangle the possible causes for this finding we develop a novel methodology for conducting counterfactual simulations of an estimated VECM that distinguishes between the roles of the nominal exchange rate as an adjustment mechanism and as a source of shocks. We find evidence that prior to joining the euro currency union, member countries relied upon exchange rate adjustments as a mechanism to correct for PPP deviations arising from divergent domestic inflation rates. But the loss of the exchange rate as an adjustment mechanism after the introduction of the euro was more than compensated by the elimination of the exchange rate as a source of shocks, in combination with faster adjustment in national price indices. These findings support claims that flexible exchange rates are not necessary to promote long-run international relative price adjustment
International macroeconomic interdependence by Paul R Bergin( Book )

7 editions published between 2017 and 2018 in English and held by 38 WorldCat member libraries worldwide

How does globalization in goods and asset markets alter the nature of economic recessions and the choices facing macroeconomic policy makers? This volume presents empirical and theoretical contributions of economist Paul Bergin to this vital question. By a number of metrics, including trade volume and price convergence, national goods markets have become more globally integrated over time. The same is true for asset markets, which today function more as a single global marketplace. Rigorous theoretical models are developed to explore how international integration in these markets provides channels by which shocks driving recession in one country can be transmitted to other countries. These theoretical concepts can shed light on the Great Recession of the last decade, which has been referred to as the first truly global recession. Theory is also brought to bear to explore how these international spillovers and the resulting international co-movement in recessions can create incentives for policy makers to coordinate their monetary and fiscal policies with each other, as they deal with the challenge of managing their national economies.--
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Alternative Names
Bergin, P.R.

Bergin, Paul

Paul R. Bergin economist (University of California-Davis)

Paul R. Bergin econoom

Paul R. Bergin Wirtschaftswissenschaftler (Ph.D. Yale University, 1996. Associate Professor of Economics at Univ. of Calif. at Davis / Tätig am Brookings Inst., Washington, DC)

English (212)