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Journal Article
Monetary policy and the adjustment to country-specific shocks
Journal Article
Exchange rates and business cycles across countries
Working Paper
How important is the currency denomination of exports in open-economy models?
The authors show that standard alternative assumptions about the currency in which firms price export goods are virtually inconsequential for the properties of aggregate variables, other than the terms of trade, in a quantitative open-economy model. This result is in contrast to a large literature that emphasizes the importance of the currency denomination of exports for the properties of open-economy models.
Journal Article
International pricing in new open-economy models
Journal Article
The euro and inflation divergence in Europe
Working Paper
Regional inflation in a currency union: fiscal policy vs. fundamentals
We develop a general equilibrium model of a two-region currency union. There are two types of goods: non-trade goods, and traded goods for which markets are segmented. Monetary policy is set by a central monetary authority and is non-neutral due to nominal price rigidities. Fiscal policy is determined at the regional level by each region's government. We find that productivity shocks alone generate significant variation in inflation across the two countries. Government spending shocks, in contrast, do not account for a significant portion of inflation variation. Varying relative country size, ...
Journal Article
The productivity of nations
Working Paper
Nontraded goods, market segmentation, and exchange rates.
Empirical evidence suggests that movements in international relative prices (such as the real exchange rate) are large and persistent. Nontraded goods, both in the form of final consumption goods and as an input into the production of final tradable goods, are an important aspect behind international relative price movements. In this paper we show that nontraded goods have important implications for exchange rate behavior, even though fluctuations in the relative price of nontraded goods account for a relatively small fraction of real exchange rate movements. In our quantitative study ...
Working Paper
Fiscal policy and regional inflation in a currency union
This paper investigates the ability of a region participating in a currency union to affect its inflation differential with respect to the union through fiscal policy. We study the interaction between regional fiscal policy and inflation differentials in a flexible-price, two-region model with both traded and nontraded goods. For symmetric regions, changes in one region?s tax rule that decrease the volatility of its inflation differential also decrease the volatility of its output. The decrease in the volatility of the inflation differential is brought about by an increase in the volatility ...
Working Paper
Nontraded goods, market segmentation, and exchange rates
Empirical evidence suggests that movements in international relative prices (such as the real exchange rate) are large and persistent. Nontraded goods, both in the form of final consumption goods and as an input into the production of final tradable goods, are an important aspect behind international relative price movements. In this paper we show that nontraded goods have important implications for exchange rate behavior, even though fluctuations in the relative price of nontraded goods account for a relatively small fraction of real exchange rate movements. In our quantitative study ...