This paper studies optimal monetary policy in a small open economy under flexible prices. The paper's key innovation is to analyze this question in the context of environments where only a fraction of agents participate in asset market transactions (i.e., asset markets are segmented). In this...

Data on the world saving distribution reveals three key features: (i) saving rates are significantly different across countries and they remain different for long periods of time; (ii) the average saving rate has remained relatively unchanged but the dispersion in saving rates has risen; and...

We document the divergence of per capita incomes across states in India between 1960 and 1996. We find that differences in the evolution of state-specific productivity can account for most of the observed increase in income disparities across Indian states during this period.

We calibrate the model to match the business cycle regularities of emerging economies. We then conduct policy experiments involving the domestic interest rate and demonstrate the central result of the paper: the relationship between interest rates and exchange rates is non-monotonic. We find...

In the last five years the international macroeconomics literature has become increasingly concerned with global current account imbalances, with particular focus on the size and persistence of the US current account deficit. While much of the recent literature on global imbalances (e.g....

We model an environment in which different vintages of capital with their different productivities coexist. A reduction in the cost of investment induces investment in new capital which raises both measured capital and measured productivity simultaneously. We calibrate this model to...

This paper revisits three features of the data that are widely known: (a) there exists a high correlation between bilateral nominal and real exchange rates; (b) real exchange rate movements are highly persistent; and (c) real exchange rates are highly volatile. The paper attempts a joint, albeit...

Development of an economy typically goes hand-in-hand with a declining importance of agriculture in output and employment. Given the primarily rural population in developing countries and their concentration in agrarian activities, this has potentially large implications for inequality along the...

Over the past 25 years there has been a remarkable economic catch-up by scheduled castes and tribes (SC/STs) towards non-SC/ST levels in the terms of their education attainment levels, their occupation choices as well as wage and consumption levels. This is remarkable given the centuries of...