In post-crisis Asia, all crisis-hit countries (except Malaysia) announced a shift from exchange rate based monetary policy framework to the explicit adoption of inflation targeting that uses interest rates as the key monetary policy operating instrument. In this study, we examine the empirical...

In spite of the concerns about "twin deficits" (fiscal and current account deficits) for the U.S., empirical evidence suggests that “twin divergence” is a more regular feature of the data: when the fiscal accounts worsen, the current account improves and vice versa. We thus study empirically...

This paper uses a panel VAR model to improve upon the existing literature on interregional risk sharing channels (e.g. Asdrubali, Sorensen and Yosha, 1996) in several respects. First, it endogenizes the output process within a multi-equation framework, capturing the dynamic feedback between...