The classic optimal currency area criterion is that countries with more correlated shocks are better candidates to form a union. We show that when countries have credibility problems this simple criterion must be changed: Symmetric countries gain credibility when joining the union only when the...

As yet, there is no consensus among macroeconomists concerning the main driving forces behind the large declines in economic activity during 2008-2009 and the subsequent slow recovery. This paper seeks to shed light on a measurement issue that confounds analyses of key macrodata during this...

In the Great Contraction, regions of the United States that experienced the largest change in household debt to income ratios also experienced the largest drops in output and employment. Such output drops not only occurred for firms that sell primarily to a local region but also for regional...

The maturity of government debt varies across countries and time. We document that in times of high inflation the maturity of debt is shorter and the level of debt is lower. We develop a model of the maturity of debt based on government credibility. We show that credible government who can...