This paper assesses the relevance of the exchange rate regime for stabilization policy. This regime question cannot be dealt with independently of other institutions, in particular how .fiscal policy is designed. We show that once .fiscal policy is taken into account, the exchange rate regime is...

This paper concerns entry mistakes when the incumbent practices strategic pricing. It is shown that an entry mistake may be a Pareto outcome. Due to an agency problem between the owner and the manager of the entrant firm there may be pooling sequential equilibria with too much entry that are...