The choice between private and government provision of a productive public good like infrastructure (public capital) is examined in the context of an endogenously growing open economy. The accumulation of public capital need not require government provision, in contrast to the standard...

This paper examines the welfare implications of managing asset-price with consumer-price inflation targeting by monetary authorities who have to learn the laws of motion for both inflation rates. Our results show that the Central Bank can reduce the volatility of consumption and asset price...

In this paper, we develop a model which explains why events in one market may trigger similar events in other markets, even though at first sight the markets appear to be only weakly related. We allow for multiple equilibria and learning dynamics in each market, and show that a jump between...

In this paper, I estimate an open economy DSGE model for the Taiwanese economy. The model features multiple sources of real and nominal rigidities, including price and wage stickiness, investment and bond adjustment costs, as well as incomplete pass-through of exchange rates. Contrary to the...

This paper contrasts the effects of tied and untied foreign aid programs on the welfare and macroeconomic performance of a small open economy. We show that the acceptance of tied aid inevitably obligates the recipient economy to undertake certain internal structural adjustments, and the...

Several authors have presented reduced-form evidence suggesting that the degree of exchange-rate pass-through to the consumer price index has declined in Canada since the 1970s and is currently close to zero. Authors such as Taylor (2000) suggest that this is due to a change in the conduct of...

This paper studies optimal tax policy problem by employing an open economy dynamic general equilibrium model with incomplete asset markets. We investigate the possibility of welfare-improving active tax policies (under which tax rates respond to changes in productivity) on factor incomes and...