A traditional argument in favor of flexible exchange rates is that they insulate output better from real shocks, because the exchange rate can adjust and stabilize demand for domestic goods through expenditure switching. This argument is weakened in a model with high foreign currency debt and...

This paper aims to provide estimates of the the Balassa-Samuelson effect in Romania – the extent to which differences in productivity growth between tradables and nontradables industries explain the observed differences in inflation between Romania and the euro area. The Balassa-Samuelson...

This paper estimates a small open economy New-Keynesian model using data from Australia and the US economy with Full Information Maximum Likelihood method. Our estimated US structural parameters are in line with those of Giordani (2004) on Canadian data. For Australian parameters we find that...

This paper uses a survey of 1281 New Zealand exporters to investigate the role of firm characteristics in setting export prices. Larger, and more productive firms, are more likely to differentiate prices across markets. Primary sector firms are more likely to price to market than firms in other...

This paper takes a first step in analysing how a monetary union performs in the presence of labour market asymmetries. Differences in wage flexibility, market power and country sizes are allowed for in a setting with both country-specific and aggregate shocks. The implications of asymmetries for...

During the last two decades, the world has experienced a remarkable process of disinflation, with average inflation rates in industrialized countries falling by 10 percentage points and an even sharper decline of the mean rate of inflation in developing countries. Parallel to the decline in...

This paper first reviews a number of stylised facts concerning OECD country business cycles over the past four decades. In general, the amplitude of business cycles has fallen, driven mainly by declining fluctuations of domestic demand. As a result, international divergencies of cyclical...

Since Friedman (1953), an advantage often attributed to flexible exchange rate regimes over fixed regimes is their ability to insulate more effectively the economy against real shocks. I use a post-Bretton Woods sample (1973-96) of seventy-five developing countries to assess whether the...

In this paper we study Finland’s way to the Economic and Monetary Union (EMU) and her economic development as a member of the EMU. First, we describe the economic background of the membership and the arguments presented in research and discussion for and against it. Then we describe...

A large body of empirical work has found that exchange rate movements have only modest effects on inflation. However, the response of an import price index to exchange rate movements may be underestimated because some import price changes are missed when constructing the index. We investigate...