A study of international macroeconomic tendencies
The EU-funded project FLUCTUATIONS (Research on economic fluctuations and globalization) was involved in a number of activities in the areas of macro and international economics. The research team examined and documented strong seasonal fluctuations in house prices and transactions, both empirically and theoretically. During the second and third yearly quarters, referred to as the 'hot season', housing markets experience an increasing trend in both prices and transaction. The 'cold season' comprises the first and fourth quarters when house prices and transactions fall under the general trend. A part of the project focused on diversification through trade. Existing knowledge has shown that increased openness to trade, which pushes countries to specialisation, is also linked to greater macroeconomic volatility. The project proposed a search-and-match framework, shedding new light on the mechanisms that govern housing market fluctuations. During the hot season, people who buy houses are willing to pay higher prices, a tendency that sellers can take advantage of. Researchers found that technological diversification can explain why poor countries are more volatile than rich countries. Development offers the adequate tools, which enables them to react to shock and mitigate their impact on economic activity, which reduces volatility. However, as evidence suggests, country-wide shocks can shape volatility patterns as much as sectorial shocks. A new estimator was developed, to be applied in cases when the dependent-variable is double bounded, which is the case for sectors or firms in the extensive margin of trade for fractional or double-bounded data. Results have also shown that United States monetary policy is less powerful in recessions and more powerful in expansions. The difference is characterised by a particularly large durables expenditure and business investment. Other activities included the development of a new econometric test to differentiate between models of non-negative data and estimates about the existence of the maximum likelihood for Poisson regression.
Keywords
Macroeconomic, seasonal fluctuations, housing market, diversification, international trade
