This paper presents the theoretical underpinnings of the MSG2 simulation model of the world economy. The MSG2 model is a dynamic general equilibrium model of the world economy which pays particular attention to the relation between stocks and flows and intertemporal constraints. The formation of...

The goal of this paper is to study the problem of optimal dynamic policy formulation with competing political parties. We study a general class of problems, in which the two competing political parties have quadratic intertemporal objective functions, and in which the economy has a linear...

The volatility of the world economy since the breakdown of the Bretton Woods par value system of exchange rates has led many policymakers and economists to call for reform of the international monetary system. Many critics of the current "non-system" call for tighter international rules of the...

Discontent with the functioning of the world monetary system has led to many proposals for international monetary reform. These proposals range from enhanced consultations under the current regime of floating exchange rates to a regime of fixed exchange rates, as proposed by Ronald McKinnon. In...

In this paper we examine the macroeconomic interdependence of Japan and the U.S. using a medium-scale simulation model of the world economy. Our goal is to determine how shifts in macroeconomic policies in the U.S. or Japan affectthe other country as well as the rest of the world. In particular...

In this paper, the authors describe a simulation model for analyzing the effects of macroeconomic policies in the OECD on global macroeconomic equilibrium. Particular attention is paid to the effects on developing countries of alternative mixes of monetary and fiscal policies in the OECD.Though...