This paper investigates the relevance of traditional trade-exchange rate theorems for developing countries facing sunk entry costs in international markets. Firstly, the theorems analysing pricing of tradable goods and the trade balance dynamics following exchange rate shocks are accounted for....

This paper applies and extends the Scandinavian model of inflation for analyzing determinants of inflation in Latvia during the period 1996-2007. Until the outbreak of the financial crisis in 2007, high inflation was a persistent problem for advocates of Latvian participation in the Euro...

This paper comments on mortgage procyclicality. A framework for credit constraints along the lines of Kiyotaki and Moore (1997) is applied to illustrate a potential regime shift in the credit risk assessments of mortgagees. Depending on the relationship between house price growth and the...

The purpose of this paper is to demonstrate the interrelation between industrial structure, productivity growth imbalances and cross-sectoral subsidies when it comes to determining economic growth and shaping a country’s transition trajectory. The theoretical framework is a two-sector supply...

This paper presents a model for the pricing of exports that relates exchange rate pass-through to the planning horizon of firms. Exchange rate pass-through is often analysed assuming exporters have short horizons, even though a number of arguments can be applied for why longer horizons govern...