No abstract.

Literature on monetary policy can be broadly classified into two categories. The first category involves the construction of dynamic stochastic general-equilibrium models for monetary policy. The solid micro foundations built into these models are important because they facilitate interpretation...

In this paper, we investigate the welfare implications of alternative financial market structures in a two-country endowment economy model. In particular, we obtain an analytic expression for the expected lifetime utility of the representative household when sovereign bonds are the only...

This paper addresses three issues on the conduct of monetary policy in open economies on the basis of a two-country model with Calvo-type sticky prices. Is the isomorphism of the optimal policy problems between closed and open economies robust to whether the foreign country is buffeted by...

Most general equilibrium models calculate welfare gains from international risk sharing based on a loglinear approximation. They have reported welfare gains ranging from zero to one percent of permanent consumption. Some simulation results -- Tesar (1995), van Wincoop (1997), and Kim (1997) --...

In this paper, we investigate the welfare implications of alternative financial market structures in a two-country endowment economy model. In particular, we obtain an analytic expression for the expected lifetime utility of the representative household when sovereign bonds are the only...

In this paper, we consider whether monetary policymakers should adjust short-term nominal interest rates in response to inflation and output forecasts rather than to recent outcomes of these variables. The use of forecast-based rules has been advocated on the basis of transmission lags and other...