Bernard T. Rocca, Jr. Chair in International Business & Trade
Economic Analysis and Policy Group, Haas School of Business
Andrew Rose is the Bernard T. Rocca, Jr. Chair in International Business & Trade and serves as Associate Dean for Academic Affairs at the Haas School of Business. He is also a Research Associate of the National Bureau of Economic Research (based in Cambridge, MA), and a Research Fellow of the Centre for Economic Policy Research (based in London, England). His research addresses issues in international trade, finance, and macroeconomics. He interested in the theory and practice of economic policy, and most of his work is applied and driven by real world international phenomena. He has worked on five continents and at a number of international economic agencies and national agencies in five continents.
Summary of recent papers:
This study quantifies the importance of a Global Financial Cycle (GFCy) for capital flows. It uses a panel of capital flow data disaggregated by direction and type between 1990Q1 and 2015Q5 for 85 countries, and conventional techniques, models and metrics. Since the GFCy is an unobservable concept, the study uses two methods to represent it: directly observable variables in center economies often linked to it such as the VIX; and indirect manifestations, proxied by common dynamic factors extracted from actual capital flows. The evidence seems inconsistent with a significant and conspicuous GFCy; both methods combined rarely explain more than a quarter of the variation in capital flows. Succinctly, most variation in capital flows does not seem to be the result of common shocks or stem from observables in a central country like the United States.
This paper investigates whether countries that use unconventional monetary policy (UMP) experience export booms. It uses a popular gravity model of trade which requires neither the exogeneity of UMP, nor instrumental variables for UMP. In practice, countries that engage in UMP experience a drop in exports vis‐à‐vis countries that are not engaged in such policies, holding other things constant. Quantitative easing is associated with exports that are about 10% lower to countries not engaged in UMP; this amount is significantly different from zero and similar to the effect of negative nominal interest rates. Thus there is no evidence that countries have gained export markets through unconventional monetary policy; any currency wars launched have been lost.