This paper analyses Krugman's contention that there is a `gold standard paradox' in the speculative attack literature. The paradox occurs if a country's currency appreciates after it runs out of gold or equivalently if a speculative attack can happen only after the country `naturally' runs out...

This paper addresses two questions: (1) Is a twelve-country monetary union in Europe feasible? (2) Can monetary union be achieved in stages, i.e. with an initial group of countries going first, and later admitting the others? After examining several politico-economic arguments concerning...

This paper studies how the creation of a European Central Bank (ECB) will change the political economy of monetary policy in Europe. The 12 governors of the EC member countries national central banks of the EEC have recently proposed a statute which delineates the institutional structure of the...

In this paper we investigate the role of credit institutions in transmitting monetary shocks to the domestic economy and to the output of the rest of the world. In modelling the monetary and financial sector of the economy we distinguish between monetary injections that take place via lump-sum...

This paper studies the institutional and political determinants of capital controls in a sample of 20 OECD countries for the period 1950<196>89. One of the most interesting results is that capital controls are more likely to be imposed by strong governments, which have a relatively `free' hand over...</196>

A common argument against either a monetary union or a regime of fixed exchange rates is that they preclude flexible use of the inflation tax. We address this point of view by comparing three alternative exchange rate regimes: a pure float, an EMS regime in which the exchange rate is fixed but...

We consider a bargaining model of the interaction between a government and interest groups in which, unlike existing models, neither side is assumed to have all the bargaining power. The government will then find it optimal to constrain itself in the use of transfer policies to improve its...

Whereas a political budget cycle was once thought to be a phenomenon of less-developed economies, some recent studies find such a cycle in a large cross-section of both developed and developing countries. We find that this result is driven by the experience of ‘new democracies’, where fiscal...

We present and analyse an optimizing model which explains the counter-intuitive effects of fiscal policy in terms of expectations. If government spending follows an upward-trending stochastic process, which the public believes may fall sharply when it reaches specific `target points', then...

The relation between IMF conditionality and country ownership of assistance programs is considered from a political economy perspective, focusing on the question of why conditionality is needed if it is in a country’s best interests to undertake the reform program. It is argued that...