This paper examines the role of fiscal policy in the determination of the exchange rate in a small open economy and discusses the efficiency of feedback rule s in minimizing the volatility of the exchange rate. Two criteria are introduced to stabilize the large fluctuations in exchange rates: (1...

This paper investigates uncertainty in sales and inventory behavior for the U.S. wholesale and retail trade sectors. First, using a vector error correction model with GARCH-M, the authors find that the uncertainty measured by forecast error variance in sales does not affect inventory behavior in...