This paper develops a small open economy, sticky-price model that determines a unique, stable long-run asset position for households as function of their incentive to anticipate or postpone consumption and labor effort across periods. This is accomplished by adopting an overlapping-generations...

We consider the fiscal multiplier and spillover—the extent to which one country's government expenditure increases production at home and also in another foreign country, when the two countries are caught simultaneously in a liquidity trap. Using a standard new open economy macroeconomics...