This paper uses an example to show that a model that fits the available data perfectly may provide worse answers to policy questions than an alternative, imperfectly fitting model. The author argues that, in the context of Bayesian estimation, this result can be interpreted as being due to the...

I develop a model that improves upon the recent literature in open economy macroeconomics in that it lends itself more directly to empirical investigation. I solve the stationarity problem that characterizes many existing models by adopting an overlapping generations structure à la Weil (1989)....

Global macroeconometric models can be a powerful tool for economic analysis and forecasting in various scenarios. This paper analyses the NiGEM model and its application to the euro area, placing particular emphasis on the study of the relative situation of the member countries' economies.

Global macroeconometric models can be a powerful tool for economic analysis and forecasting in various scenarios. This paper analyses the NIGEM model and its application to the euro area, placing particular emphasis on the study of the relative situation of the member countries' economies.

One of the consequences of globalization is the increased vulnerability of small nations to the events happening in the advanced world. This study estimates the macro-economic linkages between the GCC and the G7 countries. A small model has been developed with only seven key variables. Four of...

This paper provides a theoretical framework for quantitatively investigating the optimal accumulation of international reserves as a hedge against rollover risk. We study a dynamic model of endogenous default in which the government faces a tradeoff between the insurance benefits of reserves and...