Demographic developments have been regarded as one important cause of the long-termmovement in global interest rates. This paper provides empirical evidence of therelationship between demographics and interest rates over a wide sample of advanced andemerging market economies. It also finds that...

International financial integration has greatly increased the scope for changes in a country's net foreign asset position through the "valuation channel" of external adjustment, namely capital gains and losses on the country's external assets and liabilities. We examine this valuation channel...

A sticky-price model is used to motivate a structural VAR analysis of the current account the and the real exchange rate for seven major industrialized countries (the U.S., Canada, the U.K., Japan, Germany, France, and Italy). The analysis is distinguished from previous work in that it adopts...

Because durable goods have the quality of an asset, risk-averse consumers want to pay a lower price for durable than for nondurable goods so that they are compensated for the risk of price changes; they require risk premium. Since the exchange rate is a strong source of uncertainty in import...

For a perfectly competitive firm with a constant returns to scale technology, a greater price uncertainty has been shown to increase investment even in the presence of rreversible investment. We show, however, that the option value generated by a one-time fixed cost can cause increasing...

Positive analyses of the credibility constraint in policy often neglect the fact that political incentive constraints are also relevant in understanding observed policies. With a focus on government tax and spending policies, this paper identifies an important and positive role for political...

The pass-through effects of oil price shocks on wage and consumer price inflation vary with the states or structural characteristics of an economy. The effects have declined over time in Europe and been higher in emerging European economies than in advanced economies. The pass-through to wages...

We undertake a quantitative analysis of the dispersion of current accounts in an open economy version of incomplete insurance model, incorporating important market frictions in trade and financial flows. Calibrated with conventional parameter values, the stochastic stationary equilibrium of the...

International financial integration has greatly increased the scope for changes in a country's net foreign asset position through the valuation channel, namely capital gains and losses on external assets and liabilities. We examine this valuation channel in a dynamic equilibrium portfolio model...

This paper investigates the factors explaining exchange market pressures (EMP) and the hoarding and use of international reserves (IR) by emerging markets during the 2000s, as the Great Moderation turned to the 2008-9 global crisis and great recession. According to our results, both financial...