The empirical literature that tests for purchasing power parity (PPP) by focusing on the stationarity of real exchange rates has so far provided, at best, mixed results. The behaviour of the yen real exchange rate has most stubbornly challenged the PPP hypothesis and deepened this puzzle. This...

Is central bank transparency associated with variation in macroeconomic outcomes? Cross-country data covering 87 countries is used to construct an index for transparency based upon the detail in central banks' published forecasts. After controlling for a number of other institutional and...

Intertemporal models of the current account suggest that temporary income shocks are fully reflected in a country's net foreign asset position, so that agents invest abroad any savings generated by a positive income shock. On the other hand, a stylised fact in international economics is that...