EU Member countries have shown different degrees of ambition to reach a budget position of ""close to balance or in surplus"". Differences in ambition can only partly be explained by the relative size of cyclical safety mar-gins or differences in the number of votes in the ECOFIN Council. It is...

This paper uses a dynamic general equilibrium two-country optimizing model to analyze the consequences of international capital mobility for the effectiveness of monetary policy in open economies. The model shows that the substitutability of goods produced in different countries plays a central...

This paper uses a dynamic general equilibrium optimizing two-country model to analyze how the formation of exchange rate expectations shapes the effects of monetary policy shocks in open economies. The model implies that the short-run output effects of permanent monetary policy shocks diminish...