This paper uses a dynamic general equilibrium two-country optimizing sticky-price model to analyze the consequences of international financial market integration for the propagation of asymmetric productivity shocks in a monetary union. The model implies that business cycle volatility is higher...

Theoretical research on the determinants of business-cycle fluctuations implies that the degree of international financial integration can have important implications for the propagation of, e.g., macroeconomic policy shocks in an open economy. An important assumption underlying this research is...

This paper discusses whether the integration of international financial markets affects business cycle fluctuations. In the framework of a new open economy macro-model, we show that the link between financial openness and business cycle volatility depends on the nature of the underlying shock....

The aim of this paper is to estimate the trade gains arising from the constitution of a currency union for a set of economically large, developed nations who create a monetary union as a deliberate economic policy action: namely, for the members of the euro area. With a 1980-2001 sample, no...

This paper investigates if the euro's effect on euro-area trade differs across trade sectors and across country pairs, and to what degree heterogeneity matters for estimating the aggregate euro effect. Time-varying latent variables, which are specific to each sector in each country pair, control...

The paper presents labor productivities in the member countries of Euroland. The result is that there is quite a divergence in labor productivities (per head) in the European Monetary Union. The Netherlands and Italy reach 85 percent of the West German level, Spain 62 and Portugal 35. This...

It is conventionally held that countries are worse off by forming a monetary union when it comes to macroeconomic stabilization. However, this conventional view relies on assuming that monetary policy is conducted optimally. Relaxing the assumption of optimal monetary policy not only uncovers...

Capital flight has characterized the transformation process in Russia. Inflows of foreign direct investment have been minor and have been preceeded by inflows of portfolio capital. The paper shows that uncertainty about macroeconomic stabilization exhibits a strong negative effect on the volume...

The paper analyzes how the next financial crisis can be prevented and which role the IMF should play. The paper distinguishes between the improvement of existing instruments and solving the moral hazard problem. Both issues are interrelated. The size of operation of the IMF creates a moral...

In this paper we analyze disinflation policy when a central bank has imperfect information about private sector inflation expectations but learns about them from economic outcomes, which are in part the result of the disinflation policy. The form of uncertainty is manifested as uncertainty about...