The present paper offers a careful description of empirical identification of possible multiple changes in regime. We apply recently developed tools designed to select between regime-switching models among a broad class of linear and nonlinear regression models and provide a discussion of the...

Empirical evidence documents substantial persistence in the adjustment process to nominal shocks. Existing open-economy models have failed either to generate interesting dynamics or found that the mechanisms are quantitatively weak. We consider the propagation of nominal shocks in a fully...

We analyze the transmission of monetary shocks in a new openeconomy macroeconomics model with one-period nominal contracts and imperfect information. Shocks may have transitory and persistent components, which only through accumulation of information over time becomes known. Responses to shocks...