This paper offers an explanation for the persistence observed in real exchange rate movements. The model combines pricing to market behavior with sticky prices generated by staggered contracts. A translog preference structure is used to enhance both features. The paper finds that openness limits...

We develop an empirical framework to assess the importance of trade and technical change on the wages of production and nonproduction workers. Trade is measured by the foreign outsourcing of intermediate inputs, while technical change is measured by the shift towards high-technology capital such...

It is commonly held that power has been transferred from political parties to candidates in the last fifty years, and that television is the cause. This paper constructs a game-theoretical model of political competition in which a technological innovation, like television, can have this effect....

This paper is a statistical analysis of the manner in which the Federal Reserve determines the level of the Federal funds rate target, one of the most publicized and anticipated economic indicators in the financial world. The analysis presents two econometric challenges: (1) changes in the...

Aumann (1976) put forward a formal definition of common knowledge and used it to prove that two "like minded" individuals cannot "agree to disagree" in the following sense. If they start from a common prior and update the probability of an event E (using Bayes' rule) on the basis of private...

We analyze the impact of market structure on the trade performance of South Korea, Taiwan and Japan. Korea has many large, vertically-integrated business groups known as chaebol, whereas business groups in Taiwan are smaller and more specialized in the production of intermediate inputs. We test...

Taylor rules posit a linear relationship between the output gap, inflation, and short-term nominal interest rates. Previous work has shown that the relationship between these key economic variables as captured by the Taylor rule is quite robust both across countries and monetary policy regimes....

Suppose in each equation, not counting covariance restrictions, we need one more restriction to meet the order condition. If we now add to each equation a restriction that its structural residual is uncorrelated with the residual of some other equation, is the parameter of the new model...

A monetary union requires that a common central bank be shared among multiple nations, where governments and households may well be heterogeneous across national borders. A dynamic stochastic general equilibrium model of a two-country monetary union provides a natural setting in which to examine...

We develop a procedure to rank-order countries and commodities using dis-aggregated American imports data. We find strong evidence that both countries and commodities can be ranked, consistent with the "produce cycle" hypothesis. Countries habitually begin to export goods to the United States...