De Grauwe follows McKinnon in arguing that "for a very open economy the exchange rate is a particularly ineffective instrument." Since most countries are becoming more open this suggests that the exchange rate instrument is declining in importance. We identify a set of circumstances under which...

This paper estimates a simple model of exchange rate policy where the Central Bank optimises an objective function which takes into account competitiveness, its commitment to the EMU and the cost of adjustment. We allow for asymmetry in government behaviour whereby a key paremeter, the marginal...

I consider the problem of choosing index numbers of puchasing power and real income for international comparisons. I show that the desirable properties of methods based on the Fisher Ideal index do not extend to multilateral comparisons, except when tastes are homothetic.

This paper studies the effect on Anglo-Irish trade breaking the link between the Irish pound and sterling in 1979. A gravity model is used to explore this issue. No evidence is found of a structural break following the dismantling of the currency union. Nor did the resultant exchange rate...