Monetary policy decisions are typically characterized by three features: (i) decisions are made by a committee, (ii) the committee members often disagree, and (iii) the chairman is almost never on the losing side in the vote. We show that the combination of overconfident policymakers and a...

This paper extends the savers-spenders theory of Mankiw (2000) to analyze fiscal policy in a small open economy with endogenous labor supply. It is first shown that tax cuts have a short-run contractionary effect on domestic production, and increased public spending has a short-run expansionary...

The study asks how the potential benefits from cross-border asset trade are affected by the presence of non-traded income risk in incomplete markets. It is shown that the mean consumption growth may be lower with full integration than in financial autarky. This can occur because: the hedging...