The paper explores the interaction between debt crises and devaluation. Since the optimal level of devaluation in a crisis depends on the level of debt that has to be serviced, a default makes a devaluation less likely. Expected devaluation depends thus on expectations about default which is...

Central bank policy suffers from time-inconsistency when facing a banking crisis : A bailout is optimal ex post but ex ante it should be limited to control moral hazard. Dollarization provides a credible commitment not to help at the cost of not helping even when it would be ex ante optimal to...

A two sector small open economy model developed by Corden (1991, 2002) is used to analyse the impact of sudden stops in capital inflows on an internal and external equilibrium and to explore the merits of disposing of the nominal exchange rate as policy tool in rectifying real exchange rate...

Recent theoretical advances in consumption theory suggest that there may exist predictable consumption surges which, if not taken sufficiently into account in forecasting, may lead to predictable forecast errors. We use this insight to identify economic variables that might help improve the...

Politicians and trade unions raise the issue of illegal employment in order to provoke support, voters feel negatively touched by the presence of illegal employment, often also associated with illegal immigration. In addition there was a severe discussion in Germany about passing a minimum wage...

This paper proposes a model of the US unemployment rate which accounts for both its asymmetry and its long memory. Our approach, based on the tests of Robinson (1994), introduces fractional integration and nonlinearities simultaneously into the same framework (unlike earlier studies employing a...

Econometric analysis of convergence processes across countries or regions usually refers to a transition period between an arbitrary chosen starting year and a fictitious steady state. Panel unit root tests and panel cointegration techniques have proved to belong to powerful econometric tools if...

This article examines the location choices of cross-border Mergers and Acquisitions (M&A) between OECD members´ firms in the 1990`s. In addition to traditional determinants of FDI, we estimate the impact of specific factors affecting the M&A location pattern. Two distinct econometric methods...