In this paper we develop a stochastic monetary growth model with exogenous productivity shocks to consider the effects of changes in the financing structure of government deficits on the key variables of the economy. We study how the presence of supply-side uncertainty affects the equilibrium of...

According to conventional wisdom, a fiscal consolidation is likely to contract real aggregate demand. It has often been argued, however, that this conclusion is misleading as it neglects the role of expectations of future policy: if the fiscal consolidation is read by the private sector as a...

This paper focuses on Spanish participation in the EMS and tries to answer the following questions: What net gains can Spain be expected to make from EMS membership? Were all the required preconditions satisfied for a smooth entrance into the System? What has been the experience of the peseta so...

The imposition of a quantitative restriction on imports implies that someone somewhere is quantity-rationed. If prices rise to cut demand back to the constraint level, suppliers are rationed; if not, demanders are. In this paper we develop techniques for identifying if and when consumers are...

This paper shows how a government that cannot make credible policy commitments might manage its exchange rate and fiscal stance in a world of rational expectations. The dynamic-game model developed here potentially can generate diverse patterns of macroeconomic behaviour, patterns that differ as...

In this paper the surprising conclusion of Smith and Smith (1990) that the prospect of Britain's return to gold in 1925 had the effect of weakening sterling is subjected to critical analysis. It is shown that this conclusion is reversed when the trend in the UK money stock prior to joining the...

This paper investigates the current debate regarding the robustness of estimates of export demand and supply elasticities for LDCs and NIEs obtained by recent empirical studies. The empirical findings reported in the paper suggest that price elasticities of demand are indeed low, and that there...

This paper examines data on interest rates in the United Kingdom information on changes in policy regime and their credibility in order to discover the period from 1959-87 using quarterly data. A stochastic regime switching model used by Hamilton, based on an AR(4) model for short rates, and the...

This paper reviews the exchange rate policy experience of the Nordic EFTA countries (Finland, Iceland, Norway and Sweden) since the early 1970s. The paper briefly describes the main features of the national economies of the Nordic EFTA countries in an international perspective and their exchange...

This paper contributes to the debate engendered by the Delors Report on the issue of European Monetary Union. It focuses on the options of a strengthened (or hard-) EMS, with a commitment to a fixed exchange rate relative to the Deutschmark, or a European central bank with full monetary union...