When advising policy we face the fundamental problem that economic processes are connected with uncertainty and thus policy can err. In this paper we show how the use of simulation models can reduce policy errors. We suggest that policy is best based on so-called abductive simulation models,...

With heterogeneous productivity and sticky prices in the short run, exchange rate changes can generate real effects on agents in the economy; the result is that the currency regime becomes a policy variable amenable to political competition. This paper discusses how special interests and...

China-bashing has become a popular media and political sport. This is largely due to the U.S. trade imbalance and the belief, by some, that China is responsible for it because it manipulates its currency to hold down the dollar prices of its goods, unfairly creating a trade advantage that has...

Since the beginning of the decade, numerous economic and monetary unification projects have aroused a lot of interest. The reinforcement of economic and monetary integration, especially in Europe, has set a trend for the creation of a monetary union in many others regions of the world. Since...

Abstract Under the assumption of perfect capital mobility, inflation targeting (IT) requires central banks to primarily focus on domestic inflation and to let their exchange rate float freely. This is consistent with the macroeconomic trilemma suggesting monetary independence, perfect capital...

Europe is the natural space for the integration of the Middle East and North Africa countries (MENA) and the Central and Eastern Europe Countries (CEEC). By their small economic size, these countries revolve around the European pole with which they perform the bulk of their trade. The...

This paper analyzes stabilization policy under predetermined exchange rates in a cash-in-advance, staggered-prices model. Under full credibility, a reduction in the rate of devaluation results in an immediate and permanent reduction in the inflation rate, with no effect on output or consumption....

This study examines the effect of independent exchange rate pursuits and reserve holdings, relative to other determinants, on global export performance of WAMZ countries. The regression results show that exports originating from the Zone to the rest of the world are influenced positively by...

One of the most important instruments of economic policy of the opened countries is the exchange rate. It is considered both a mean of monetary regulation and a tool of outside competitiveness. Morocco plans to adopt the floating exchange rate regime, in the end of 2009. Indeed, the question...

We study the apparent disconnect between what countries announce to be their exchange rate regime and what they de facto implement. Even though discrepancies between announcements and de facto polices are frequent, there is a lack of understanding of actual patterns and underlying reasons. We...