The out-of-sample forecasting performance of error-correction models of exchange rates is tested on recent monthly data and on annual data from 1900 to 1995. The results for the monthly data set strongly favor the naive model, even when the series are pooled. In the annual data, the best model...

Endogenous growth models, such as Barro (1990), predict that government expenditure and taxation will have both temporary and permanent effects on growth. We test this prediction using panels of annual and period-averaged data for OECD countries during 1970-95, isolating long-run from short-run...

The ratio of Japanese export prices to the domestic output price of manufacturers is sensitive to the real exchange rate of the U.S. dollar as well as to that of the yen in the short run. In the long run, however, only the yen real exchange rate is significant. These findings are attributed to...

Using data from a large sample of developing countries from 1985 to 2001, we confirm that hard pegs (currency boards or a shared currency) reduce inflation and money growth. There is no evidence that soft pegs confer any monetary discipline, after other factors are controlled for. Inflation...

This paper explores the relationship between the denomination of public debt and the choice of exchange rate regime. Three types of debt (nominal, indexed, and foreign) and two regimes (fixed and flexible) are considered. Indexed debt is insulated against unexpected inflation. The real...