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Working Paper
The risk premium in the foreign exchange market
Journal Article
Maintaining central bank credibility
Central banks around the world potentially face a skeptical public when they announce a commitment to controlling inflation. Some economists have argued that, to enhance credibility, central banks should adopt monetary growth rules or other institutional arrangements. Yet it appears there are no costless solutions to the credibility problem.
Working Paper
An analysis of the welfare implications of alternative exchange rate regimes: an intertemporal model with an application
We construct a two-period model of an open economy and use the model to analyze the welfare implications of fixed and floating exchange regimes. Consumers have perfect foresight and save by holding domestic and foreign bonds, which are chosen according to relative interest rates, deflated by the rate of devaluation of the domestic currency. The government produces a pure public good and finances its deficits by issuing money, domestic bonds, and by foreign borrowing. The government's bonds compete with private investment, which is entirely debt financed. Foreign exchange, i.e., foreign bonds, ...
Working Paper
Taxing capital in an open economy
Working Paper
Government finance in a model of currency substitution
Working Paper
Government finance in a common currency area