While assertions are often made that non-cooperative fiscal policies suffer a contractionary bias, general equilibrium models have shown that the bias is unambiguously expansionary. This paper argues that the latter result relies on a particular and critical way of modelling international trade,...

We present a new application of Samuelson's Correspondence Principle to the analysis of comparative dynamics in stochastic rational expectations models. Our version, which we call the E-correspondence principle, applies to rational expectations equilibria that are stable under least squares and...