Previous assessments of nominal exchange rate determination have focused upon a narrow set of models typically of the 1970's vintage, including monetary and portfolio balance models. In this paper we re-assess the in-sample fit and out-of-sample prediction of a wider set of models that have been...

The real exchange rate - real interest rate (RERI) relationship is central to most open economy macroeconomic models. However, empirical support for the relationship, especially when cointegrationbased methods are used, is rather weak. In this paper we reinvestigate the RERI relationship using...

This paper reviews three important issues in the literature on international and intranational risk sharing. First, we establish a comprehensive set of stylized facts for consumption risk sharing within and across countries. Consistent with the findings in the literature, we find that the...

In this paper we study the link between elections, fiscal policy and economic growth/fluctuations. The set-up is a dynamic stochastic general equilibrium model of growth and endogenously chosen fiscal policy, in which two political parties can alternate in power. The party in office chooses...

This paper provides a new test for whether different-currency assets are imperfect substitutes. The test exploits that under floating rates, changing public currency demand has no direct effect on monetary fundamentals, current or future. Price effects from imperfect substitutability are clearly...

The cyclicality of real wages has important implications for the validity of competing business cycle theories. However, the empirical evidence on the aggregate level is inconclusive. Using a threshold vector autoregressive model for the US and Germany to condition the relationship between real...

The East Asian miracle was real. Prior to the 1997 economic and currency crises, Asian NICs - Hong Kong, Korea, Singapore and Taiwan - achieved remarkable annual GDP growth. In these countries the overall economic performance was significantly determined by the industrial development triggered...

In this paper we use a model of vertical product differentiation to cast doubt on the general validity of the import demand function as specified in macroeconomic models. The empiricai importance of our theoretical concerns is then examined with the aid of two hypotheses. According to the first...

Survey data from the United States, West Germany and East Germany are analyzed to compare individual attitudes towards political redistribution in each country. In West Germany the "homo oeconomicus effect", the "social rivalry effect" and the "public values effect" simultaneously retain an...

This paper searches for a general equilibrium model of optimal growth and endogenous fiscal policy with the aim of explaining the interaction between private agents and fiscal authorities in the U.S., West Germany, Japan and the U.K. over the period 1960-1996. Our search is conducted in the...