In the recent decade, capital outows from emerging economies, in the form of a demandfor liquid assets, have played a key role in the context of global imbalances. In this paper,we model the demand for liquid assets by rms in a dynamic open-economy macroeconomicmodel. We nd that the implications...

The main objective of this work is to develop a general equilibrium business cycle model linking financial and real estate markets to the macroeconomy. The ability of a production economy to account simultaneously for asset pricing, business cycle and real estate market facts is then evaluated...

The `quantity anomalies' that arise from standard international business cycle models are cross-country correlations in consumption being higher than output, and negative comovement in aggregate investment and employment. This paper shows thatincorporating multiple sectors with heterogeneous...

National borders are still strong barriers for mergers and acquisitions inEurope. We estimate a gravity equation model based on NUTS 2-regionsand find that the restraining impact of national borders decreased byabout a third between 1990 and 2007. However, there has been nosignificant change...

The U.S. dollar holds a dominant place in the invoicing of international trade, along two complementary dimensions. First, most U.S. exports and imports invoiced in dollars. Second, trade flows that donot involve the United States are also substantially invoiced in dollars, an aspect that has...

This paper provides a stylized choice-thoretic model to analyze optimal monetary policies among interdependent economies. In response to marcoeconomic shocks, policymakers strike a balance between two objectives. The first is to stabilize marginal costs and markups to offset the distortions...

This study analyzes a two-country dynamic general equilibrium model with nominal rigidities,monopolistic competition and producer currency pricing. A quadratic approximation to the utility ofthe consumers is derived and assumed as the policy objective function of the policymakers.It is shown...

In this paper, the following question is posed: Can the New KeynesianOpen Economy Model by Galí and Monacelli (2005b) explain “Six MajorPuzzles in International Macroeconomics”, as documented in Obstfeldand Rogoff (2000b)?The model features a small open economy with complete markets,...

This paper studies the optimal design of monetary policy in an optimizing two-country sticky price model. We suppose that the production sequence of final consumption goods stretches across both contries and is associated with vertical trade. Prices of final consumption goods are sticky in the...

We use a two-country model with a central bank maximizing union-wide welfareand two fiscal authorities minimizing comparable, but slightly differentcountry-wide losses. We analyze the rivalry between the three authorities inseven static games. Comparing a homogeneous with a heterogeneous...