The authors develop an analytically tractable two-country model that marries a full account of global macroeconomic dynamics to a supply framework based on monopolistic competition and sticky nominal prices. The model offers simple and intuitive predictions about exchange rates and current...

This paper offers empirical evidence that real exchange rate volatility can have a significant impact on long-term rate of productivity growth, but the effect depends critically on a country's level of financial development. For countries with relatively low levels of financial development,...

This paper shows that, under fairly general conditions, lending to small countries must be supported by the direct sanctions available to creditors and cannot be supported by a country's "reputation for repayment." This distinction is critically important for understanding the true underlying...

The NBER Macroeconomics Annual presents pioneering work in macroeconomics by leading academic researchers to an audience of public policymakers and the academic community. Each commissioned paper is followed by comments and discussion. This year's edition provides a mix of cutting-edge research...

The <i>Journal of Economic Literature</i> regularly reviews books of interest to the economics profession. The 2006 <i>Economic Report of the President (ERP)</i> falls under that purview. In the reviews that follow, Martin Feldstein reviews the overview chapter of the as well as topics relating to...

This paper discusses the profound difficulties of maintaining fixed exchange rates in a world of expanding global capital markets. Contrary to popular wisdom, industrialized-country monetary authorities easily have the resources to defend exchange parities against virtually any private...