The traditional neoclassical open-economy flexible exchange rate model is expanded to include a “credit channel” by incorporating a bank loan market. The new “credit view” model provides substantially different predictions concerning the neutrality of money and the types of autonomous...

This paper investigates how economic openness affects the responsiveness of aggregate supply (AS) and aggregate demand (AD). We show that AD is flatter in more-open economies when economic openness is positively associated with the slope of AS (Romer, 1993)

This paper investigates the relation between economic openness and the aggressiveness of monetary authorities to ensure price stability. In a sample of 114 countries for the period 1949-2001, we find that more open economies tend to have more aggressive monetary policies which results in less...