Adjustment primarily occurred through existing importers and exporters changing their product mix. This implies that the macroeconomic impact of such rapid external adjustment does not come from the two channels most focused on in the literature: it does not result from the reallocation of...

The frequency of price adjustment is a central topic of research in macroeconomics. Recently, there has been a surge in empirical research on the measures of this frequency. A consistent finding across all the studies is that there is significant heterogeneity in the frequency of price...

invoicing persist.

We characterize optimal taxation of foreign capital and optimal sovereign debt policy in a small open economy where the government cannot commit to policy and seeks to insure a risk averse domestic constituency. The expected tax on capital is shown to vary with the state of the economy,...

The crisis in the Euro area has partly been blamed on the inability of individual countries to devalue their currencies. In this paper we evaluate the extent to which fiscal instruments can be used to replicate the behavior of an exchange rate devaluation in a New Keynesian Open Economy...

Are quantitatively important real rigidities present in the data? The answer appears to depend on what data one looks at. Recent studies using price data underlying US CPI index provide evidence suggesting a limited role for real rigidities. Evidence from international prices, however, points...

Episodes of large crises such as the Mexican crisis in 1994-1995, the East Asian crisis in 1997-1998, and the Argentine crisis in 2001-2002 are associated with large adjustments in trade flows. The dollar value of imports in Argentina, for instance, dropped by 80 percent between 2000 and 2002. A...