The recent theory of exchange rate dynamics within a target zone holds that exchange rates under a currency band are less responsive to fundamental shocks than exchange rates under a free float, provided that the intervention rules of the Central Bank(s) are common knowledge. These results are...

The paper analyzes the role of fiscal policy in the restoration of internal and external macroeconomic equilibrium and in achieving structural adjustment, i.e. major changes in the patterns of sectoral and intertemporal resource allocation. The focus is on developing and new industrial countries...

The paper studies the design of efficient anti-inflationary policies in a two-country interdependent economic system. A number of alternative specifications of the price formation process are considered, incorporating successively higher degrees of price level and inflation inertia. The...

This paper studies the likely consequences of monetary unification among the EC members for the conduct of fiscal policy in the EC countries (and by an emerging Federal European Fiscal Authority). Among the conclusions are the following. If the Eurofed is to be independent, the external exchange...

If Stage Three of EMU starts on 1 January 1999, transition issues remain on two time scales. Until 1 July 2002, national currencies and the euro coexist as legal tender. We argue that intra-EMU currency risk exists in principle during that period, but that no EMU member can be forced out through...

This study updates and extends to the period 1988/9--1992/3 our earlier analysis of the public finances of India. The foreign exchange crisis of early 1991 forced the government to recognize the severity of the fiscal crisis it was facing and led to the implementation of a restrictive fiscal and...

The paper considers the pros and cons for Canada of monetary union between Canada and the United States. The current Canadian monetary arrangements, a flexible exchange rate and an inflation target, are contrasted both with a unilateral adoption by Canada and the US dollar and with a full,...