It has been shown that under perfect competition and a Cobb-Douglas production function, a basic real business cycle model may exhibit indeterminacy and sunspot fluctuations when income tax rates are determined by a balanced-budget rule. This paper introduces in an otherwise standard real...

This paper develops and estimates a general equilibrium rational expectations model with search and multiple equilibria where aggregate shocks have a permanent effect on the unemployment rate. If agents' wealth decreases, the unemployment rate increases for a potentially indefinite period. This...

The paper examines the determinants of employment growth, drawing on data available across a sample of Caribbean countries. To that end, the paper analyzes estimates of the employment-output elasticity and the response of employment growth to major sources of labor market determinants, in the...

This Selected Issues paper for Chile describes the postcrisis recovery experience. The recovery from the 2008–2009 global crisis has been markedly different both among advanced and emerging economies. The steady improvement in the labor wedge-distortions related to the consumption leisure...

The 2007 Article IV Consultation on the United Arab Emirates (UAE) examines the near- and medium-term outlook, inflation, and fiscal policy. The rapid expansion is supported by an outward-oriented development strategy and sustained high oil prices. Reforms are under way to strengthen the...

The Euro Area Policies’ 2007 Article IV Consultation reports that the economy is poised for a sustained upswing because of cyclical considerations and policies, which have had a forward-looking cast. The area’s external position and the real effective exchange rate of the euro are...

The purpose of this paper is to present a model that circumvents the requirement of explicitly setting a period in which the fiscal budget is to be balanced, yet implies that increases in the growth of public debt are bound to increase inflation when there is no perceived commitment to reduce...

This paper takes stock of the evolution of the international monetary system over the last thousand years. Several points stand out from the analysis. One is the reluctance of governments to embrace radical changes in international monetary relations. Another is the conflict between external and...

Through the profiling of institutional cash pools, this paper explains the rise of the "shadow" banking system from a demand-side perspective. Explaining the rise of shadow banking from this angle paints a very different picture than the supply-side angle that views it as a story of banks'...

Sudanese inflation dramatically fell in 2000. But just prior to the sharp decline, an export ban was placed on Sudanese livestock. Motivated by this clue, and in the absence of any reliable income or employment data, this paper systematically develops simultaneous models of the consumer price...