The paper analyses the transition in Russia through a theoretical model in which job-to-job mobility plays a crucial role. It shows that job-to-job mobility is a key factor preventing a discontinuous break in unemployment and insulating wages in declining sectors from aggregate disequilibria. In...

The debate about a European Monetary Union (EMU) revolves mainly about two issues: the costs of the loss of a national policy instrument, in the form of stabilization and revenues of seigniorage, and the gains from policy coordination. We argue that the costs of giving up national seigniorage...

This Discussion Paper analyses 23 industrial sector in a sample of 51 developed and developing countries. It distinguishes the contribution of five factors: private capital, infrastructure, education, trade integration, and net efficiency. Several relatively small handicaps, combined...

The paper develops the view that the perspective on the HIPC initiative is distorted by the fact that – contrary to the Brady deal itself – it lacks all perspective on the ‘market value’ of the debt which is written down. The appropriate ‘market value’ is one that takes account of...

The two notes deal (from different angles) with the extension of the Solow model that has been offered by Mankiw, Romer and Weil (MRW). In this `extended Solow' model, physical capital enters the production function with the same weight as human capital and both weights are about 1/3. The first...

Against all odds, the euro turned out to be a weak currency. We argue that this outcome can readily be explained by the policy mix that was chosen at the onset of the period: tight fiscal policies following the convergence mechanism that was imposed by the Maastricht treaty and loose monetary...

The capital-output ratio is more than 40% lower in the poor countries than in the richest ones. Comparing TFP in manufacturing and in the economy at large, we show that the Balassa-Samuelson effect explains the bulk of this scarcity: TFP in manufacturing is indeed about 40% lower than TFP in the...

Commodity prices are usually very slow to recover from adverse shocks. This is one of the reasons why it has proven so difficult either to smooth their effect or to stabilize them, and why it is sometimes argued that they should behave as if shocks were permanent. There is no reason however why...

The dynamic inconsistency of a government's preferred policy, when it occurs, usually implies that the maximum level of welfare that can be delivered at some initial time can only be attained by constraining the economy to `low' levels in the future. In this paper, we set up a linear quadratic...

We analyze a two-country zone facing a joint inflationary shock and responding with coordinated and uncoordinated monetary and fiscal policies. We show that the standard presumption that the absence of coordination results in an excessive exchange rate appreciation of the zone with respect to...