This paper presents a simple counterexample to the belief that policy cooperation among benevolent governments is desirable. It also explains circumstances under which such counterexamples are possible and relates them to the literature on time inconsistency. Copyright 1989 by The Review of...

The authors provide a theoretical interpretation of two features of international data: the countercyclical movements in net exports and the tendency for the trade balance to be negatively correlated with current and future movements in terms of trade but positively correlated with past...

Frontmatter -- CONTENTS -- ILLUSTRATIONS -- TABLES -- PREFACE -- CONTRIBUTORS -- 1. Economic Growth and Business Cycles -- 2. Recursive Methods for Computing Equilibria of Business Cycle Models -- 3. Computing Equilibria of Nonoptimal Economies -- 4. Models with Heterogeneous Agents -- 5....

The authors ask whether a two-country business cycle model can account simultaneously for domestic and international aspects of business cycles. With this question in mind, the authors document a number of discrepancies between theory and data. The most striking discrepancy concerns the...

Some economists argue that as long as governments can earn the market rate of return by saving abroad, standard reputation models cannot support debt. The authors argue that these standard reputation models are partial in the sense that actions of agents in one arena affect reputation in that...

The authors study the general equilibrium effects of social insurance on transition in a model in which the process of moving workers from matches in the state sector to new matches in the private sector takes time and involves uncertainty. As might be expected, adding social insurance to an...