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Artículo de revista This article describes the main characteristics of the trade agreement reached between the European Union (EU) and the Common Market of the South (MERCOSUR) in 2019 and presents estimates of its possible impact on trade and GDP in the two areas." "It is an ambitious agreement involving the full liberalisation of almost all of the goods trade between the two blocs, facilitating the provision of services and the reduction of non-tariff barriers, and envisaging reciprocal liberalisation of public procurement. Similarly, it includes provisions on the protection of the environment and workers’ rights." "The agreement’s estimated effects on trade and economic activity will be significant for MERCOSUR. The impact for the EU will be more modest, yet always positive, since trade with MERCOSUR is less significant for EU members. Spain is among the EU member countries whose economies will benefit most from the agreement.

Artículo de revista Emergingmarkets have gained prominence as recipients of capital flows since the onset of the financial crisis in 2008. This raises their exposure and goes hand in hand with greater dependence on external financing and heightened sensitivity to global shocks. However, some differences can be observed across regions. For example, while the more stable types of capital flows (direct investment) continue to outweigh other types in Latin America, in Asia and the Middle East the recent increase in capital inflows has taken the form of debt, private in the case of Asia and mostly government debt in the Middle East. Against this background, this article examines the impact on the capital flows to these economies of five potential global shocks: an appreciation of the dollar, a fall in commodity prices, an increase in global aversion to risk, expectations of monetary policy tightening in the United States and lower regional growth compared with advanced economies. The findings of this article suggest that the factor with the greatest impact on portfolio flows to emerging markets is the appreciation of the dollar although, in the case of Latin America, commodity prices also play a very significant role

Artículo de revista In an attempt to rebalance trade with China, the United States administration decided in early 2018 to introduce a series of protectionist measures affecting certain imports in particular. This gave rise to an escalation of US-China trade tensions. The new tariffs have affected a significant percentage of Chinese exports to the United States, but their impact on EU trade has only been marginal to date. The indirect effects on European economies through the global value chains have also been limited. However, possible tariff barriers on the automotive sector could raise the affected trade flows substantially. Simulations made with econometric models confirm that the tariff measures adopted to date would have relatively moderate direct effects on global economic activity and on EU countries. That said, the simulations also warn that a decrease in business confidence and an unfavourable reaction by international financial markets could amplify such adverse effects. Additionally, possible future auto sector tariffs could have a significant impact on European economies in an industry already facing important challenges associated with the structural and technological transformation process currently under way

Artículo de revista En un intento de reequilibrar el comercio con China, la Administración de Estados Unidos decidió a principios de 2018 introducir una serie de medidas de carácter proteccionista que afectaban de forma particular a determinadas importaciones, lo que dio lugar a una escalada de tensiones comerciales con dicho país. Los nuevos aranceles han afectado a un porcentaje relevante de las exportaciones chinas dirigidas a Estados Unidos, pero han tenido un impacto hasta el momento solo marginal en el comercio de la Unión Europea (UE). Los efectos indirectos sobre las economías europeas a través de las cadenas globales de valor han sido limitados también. Sin embargo, posibles barreras tarifarias al sector del automóvil podrían elevar sustancialmente los flujos comerciales afectados. Simulaciones realizadas con modelos econométricos confirman que las medidas arancelarias adoptadas hasta el momento tendrían efectos directos relativamente moderados sobre la actividad económica global y sobre los países de la UE. Con todo, las simulaciones también alertan de que la reducción de la confianza empresarial y la reacción desfavorable de los mercados financieros internacionales podrían actuar como amplificadores de dichos efectos adversos. Además, posibles futuros aranceles sobre el sector del automóvil podrían tener un impacto significativo sobre las economías europeas, en un sector que se enfrenta ya a retos importantes asociados al proceso de transformación estructural y tecnológica en el que se halla inmerso.

Artículo de revista La globalización financiera ha avanzado notablemente en las últimas décadas. En principio, una mayor integración debería elevar el grado de eficiencia económica. Sin embargo, la evidencia empírica sugiere que, para ello, los países deben contar con instituciones económicas bien diseñadas y mercados financieros locales suficientemente desarrollados. Además, estos flujos pueden poner en riesgo la estabilidad financiera en determinadas circunstancias, por lo que las autoridades económicas necesitan disponer de criterios e instrumentos para hacer frente a estas situaciones. El uso de dichas herramientas debe hacerse en el contexto de un programa más amplio de medidas, que incluya los ajustes macro y microeconómicos que se requieran. Además, la cooperación internacional aparece como complemento necesario de la globalización

Artículo de revista Financial globalisation has advanced notably in recent decades. In principle, greater integration should raise the degree of economic efficiency. However, the empirical evidence suggests that, for this to occur, countries should have well-designed economic institutions and sufficiently developed local financial markets. Moreover, these flows may jeopardise financial stability in certain circumstances, whereby the economic authorities need to draw on criteria and instruments to withstand such situations. These tools should be used as part of a broader programme of measures that includes the macro and microeconomic adjustments required. Furthermore, international cooperation emerges as a necessary complement to globalisation

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Reversals in capital inflows can have severe economic consequences. This paper develops a dynamic general equilibrium model to analyse the effect on interest rates, asset prices, investment, consumption, output, the exchange rate and the current account of a shift in portfolio preferences of foreign investors. The model has two countries and two asset classes (equities and bonds). It is characterised by imperfect substitutability between assets and allows for endogenous adjustment in interest rates and asset prices. Therefore, it accounts for capital gains arising from equity price movements, in addition to valuation effects caused by changes in the exchange rate. To illustrate the mechanics of the model, we calibrate it to analyse the consequences of an increase in the importance of sovereign wealth funds (SWFs). Specifically, we ask what would happen if ‘excess’ reserves held by emerging markets were transferred from central banks to SWFs. We look separately at two diversification paths: one in which SWFs keep the same allocation across bonds and equities as central banks, but move away from dollar assets (path 1); and another in which they choose the same currency composition as central banks, but shift from US bonds to US equities (path 2). In path 1, the dollar depreciates and US net debt falls on impact and increases in the long run. In path 2, the dollar depreciates and US net debt increases in the long run. In both cases, there is a reduction in the ‘exorbitant privilege’, ie, the excess return the United States receives on its assets over what it pays on its liabilities. The model is applicable to other episodes in which foreign investors change the composition of their portfolios.

We decompose the Backus-Smith [1993] statistic --- a low or negative correlation between relative consumption and the real exchange rate at odds with a high degree of international risk sharing --- in its dynamic components at different frequencies. Using multivariate spectral analysis techniques we show that, in most OECD countries, the dynamic correlation tends to be more negative, and significantly so, at business cycle or lower frequencies --- the appropriate frequencies for assessing the performance of international business cycle models. Theoretically, we show that the dynamic correlation predicted by standard open-economy models is the sum of two terms: a term constant across frequencies, which can be negative as a function of uninsurable risk; a term variable across frequencies, which in bond economies is necessarily positive, reflecting the insurance intertemporal trade provides against forecastable contingencies. We show that the main mechanisms proposed in the literature to account for the puzzle are consistent with the evidence.