Empirical studies have found that inflation targeting leads to a fall in real interest rate, macroeconomic uncertainty, exchange rate volatility, and output volatility. Economic theory suggests that those elements should lead to a rise in investment and a fall in private savings. However, Rose...

This paper analyses the relation between the external and government deficits in a panel of CEEC economies. We first assess by panel unit root tests whether the fiscal and external intertemporal budget constraints hold, and then examine the role of public and private expenditure in the dynamics...

Whether or not a current account deficit is sustainable has important implications for policy. If the current account deficit of a nation is sustainable, then it implies that the government should have no incentive to default on its international debt. In this article, we examine whether or not...

Chen (2011) [Are current account deficits really sustainable in the G-7 countries? Japan and the World Economy, 23(3), 190–201.] examines whether or not the current account deficits of the US can be characterized by a unit root process with regime switching (MS-ADF). In this paper, we find...

We present a model of bilateral real exchange rate determination based on different theories that can be combined into a common statistical framework. Although eclectic, the approach is successfully used to shape a final specification which performs surprisingly well when out of sample exercises...