Episodes of large crises such as the Mexican crisis in 1994-1995, the East Asian crisis in 1997-1998, and the Argentine crisis in 2001-2002 are associated with large adjustments in trade flows. The dollar value of imports in Argentina, for instance, dropped by 80 percent between 2000 and 2002. A...

The authors show that even when the exchange rate cannot be devalued, a small set of conventional fiscal policy instruments can robustly replicate the real allocations attained under a nominal exchange rate devaluation in a standard New Keynesian open economy environment. They perform the...

The closed and open economy literatures both work on evaluating the role of real rigidities, but in parallel. This paper brings the two literatures together. We use international price data and exchange rate shocks to evaluate the importance of real rigidities in price setting. We show that,...

The closed and open economy literatures both work on evaluating the role of real rigidities, but in parallel. This paper brings the two literatures together. We use international price data and exchange rate shocks to evaluate the importance of real rigidities in price setting. We show that,...