Recently, several countries have been considered the relative merits of "dollarization", that is, adopting the currency of an anchor country. One of the main potential costs of dollarization is that macroeconomic stability may be reduced by the loss of monetary policy autonomy. In this paper, we...

Contract structures typically embedded in a recent generation of models with nominal inertia have been criticized for a failure to generate persistent responses of output and inflation to nominal shocks. In this paper, we argue that this failure does not reflect an inherent limitation of the...