thought not, and theory offers ambiguous messages. A hard exchange-rate regime such as the gold standard might limit monetary … shocks if it ties the hands of policy makers. But any decision to forsake exchange-rate flexibility might compromise shock … absorption in a world of real shocks and nominal stickiness. A simple model shows how a lack of flexibility can be discerned in …

reduce taxes on labor income, showing that such a policy could increase world productive capacity while being consistent with …