This paper analyzes the inefficiencies arising from the combination of fixed exchange rates,
nominal rigidity, and free capital mobility. We document that nominal wages are downwardly …

The classic introduction to the New Keynesian economic model This revised second edition
of Monetary Policy, Inflation, and the Business Cycle provides a rigorous graduate-level …

We lay out a small open economy version of the Calvo sticky price model, and show how the
equilibrium dynamics can be reduced to a simple representation in domestic inflation and …

The vast empirical exchange rate literature finds the effect of exchange rate volatility on real
activity to be small or insignificant. In contrast, this paper offers empirical evidence that real …

We study cross-country risk sharing as a second-best problem for members of a currency
union using an open economy model with nominal rigidities and provide two key results …

Empirical evidence shows that most exchange rate volatility at short to medium horizons is
related to order flow and not to macroeconomic variables. We introduce symmetric …

This chapter studies optimal monetary stabilization policy in interdependent open
economies, by proposing a unified analytical framework systematizing the existing literature …

This paper studies whether the international monetary system can be affected by
asymmetries in the cross‐country positions in the international financial markets, ie, the fact …

The short-run effects of fiscal policy depend not only on current tax and spending choices,
but also on expectations about future policy adjustment. While general equilibrium models …

This paper explores optimal policy design in an estimated model of three small open
economies: Australia, Canada and New Zealand. Within a class of generalized Taylor rules …