Cross-country output convergence is re-examined using a flexible concept of unit roots. While the presence of a constant unit root in output-differences implies nonconvergence, the presence of a stochastic unit root on the contrary implies convergence. Using the output-differences between the...

This article proposes a dual targets monetary policy rule for small open economies. In addition to a domestic monetary target, this rule targets the nominal exchange rate at a fixed level. The policy rule is derived from a dynamic programming problem and evaluated in the context of an...