This paper uses a two-country version of the global economy model to investigate some costs and benefits of a small, emerging economy's abandoning a flexible exchange rate regime in favor of adopting the currency of its main trading partner. The topic is particularly relevant for countries in...

Exchange rate pass-through in a set of euro area prices along the pricing chain is examined in this paper. First, a vector autoregression (VAR) approach is used to analyze the joint time-series behavior of the euro exchange rate and a system of area-wide prices in response to an exchange rate...

Exchange rate pass-through in a set of euro area prices along the pricing chain is examined in this paper. First, a vector autoregression (VAR) approach is used to analyze the joint time-series behavior of the euro exchange rate and a system of area-wide prices in response to an exchange rate...

This paper examines the global distribution of current accounts. Using a panel of more than 100 countries, the analysis establishes a set of stylized facts regarding the collective behavior of current accounts over the past four decades. In particular, we find that the global dispersion of...

This paper examines the long-run determinants of the real exchange rate from a stock-flow perspective. The empirical analysis estimates a long-run relationship between the real exchange rate, net foreign assets, and other factors affecting trade flows. Using postwar data for the United States...

This paper investigates the consequences of pricing to market for exchange rate pass-through and real exchange rate dynamics across different patterns of trade. Under two-way, intraindustry trade – where home prices display greater linkage with those of foreign competitors – domestic and...

Evans (1991) has demonstrated that Blanchard's (1985) finite-horizon model obeys approximate Ricardian equivalence. This paper shows that this result is determined largely by an unrealistic assumption that labor income grows monotonically over the consumer's entire lifetime. With more realistic...

The changing degree of capital mobility in several Pacific Basin countries that have pursued financial liberalization is estimated empirically. Tracing the impact of the liberalization process on the capital account, the paper also examines the implications for monetary policy operating in this...