This paper builds a two-country stock-flow consistent model by com- bining a debt-led economy that emits the international reserve currency with an export-led economy. The model has two major implications. First, an initial trade deficit in the debt-led country leads to a perma- nent imbalance...

The paper presents a benchmark multi-sectoral stock-flow consistent (SFC) macro model which addresses issues of production, energy, and emissions in a demand-driven framework. The model introduces three innovations in modeling the production side of the economy. First, the firms and the energy...

In this paper we show that the macroeconomic effects of a transient interestrate peg can be significantly dampened when the peg is perceived to be imperfectly credible by the private sector. By doing so, we provide a solution to what has become known as the "forward guidance puzzle". This is the...

DSGE models have recently become one of the most frequently used tools in policy analysis. Nevertheless, their forecasting proprieties are still unexplored. In this article we address this problem by examining the quality of forecasts from a small size DSGE model, a trivariate VAR model and the...

In a first phase, during the Great Depression, historical events favored Keynesian interpretation of the scarce aggregate demand theory and of the necessity for a demand management through a state intervention mechanism in order to stabilize the economy. Therefore, economists were ready for a...

The Central Bank of Uruguay started to an interest rate instrument for monetary policy in September 2009. This paper develops a Small Structural Model for the Uruguayan economy which contributes to the understanding of the channels through which monetary policy operates under a flexible...

With the release of Treasury papers from the 1970s under the 30-year rule we have a much more complete picture of the dispute in the 1970s between the Treasury and the Cambridge Economic Policy Group, especially given the role of three Cambridge economists -- Nicholas Kaldor, Wynne Godley and...

Both from theoretical and practical viewpoints, I argue that the New Keynesian model's forward-looking IS curve should be derived by quadratic approximation. This leaves uncertainty in the basic three-equation model. After adding exogenous AR(1) processes, I examine the results by numerical...

Computable General Equilibrium Models and Macro-Econometric Models are deeply disaggregated macro-economic systems, which are used in economic environmental studies to explain the emissions of pollutions and the extraction of resources. CGE models are based on neoclassical theory depicting...

This paper considers a plan proposed by Warren Buffett, in which importers would be required to obtain certificates proportional to the amount of non-oil goods (and possibly also services) they brought into the country. These certificates would be granted to firms that exported goods. Exporting...