Can process conditionality really enhance poverty reduction in developing countries? This question is addressed in the framework of a politico-economic model considering political distortions both on the recipient and on the donor side. It turns out that process conditionality is a very useful...

We analyze the consequences of political polarization between domestic policymakers for international policy cooperation. Coordination of policies is preferred compared to non-coordination even under polarization if it allows policymakers to constrain the policy choice of policymakers with...

Should a common central bank in a heterogeneous monetary union base its decisions on EU-wide averages of economic variables or on national welfare losses? A central bank that minimizes the sum of national welfare losses reacts less to common shocks. Under certain parameter constellations this...

In this paper, we survey the case for central bank independence (CBI). We conclude that CBI is neither necessary nor sufficient for monetary stability. CBI is just one potentially useful monetary policy design instrument among several, and CBI should not be treated as an exogenous variable....

Most proposals for Asian monetary cooperation assign a special role to the Japanese yen as an anchor currency. We focus instead on the potential role of the Chinese renminbi. It becomes increasingly clear that China will assume the role of the dominant economy in the region, and that it will...

The paper explores the interaction between the proposed monetary union for ECOWAS and structural reforms of fiscal policy. The effects depend to a large extent on the degree of similarity of member countries. In a monetary union of similar countries, member states run a more distortive fiscal...