This paper attempts to quantify the costs imposed by asymmetric shocks under European Monetary Union compared to free floating. A simple two-country model is examined where policy is set in an optimal, time consistent manner. Nominal and real rigidities are present in both economies, but prices...

This paper presents a study of U.K. earnings over the period 1967-87 aimed at establishing whether wagesetters anticipate future movements in prices. Two models are proposed: the first where agents form rational predictions about future price movements and the second where they use simple...

This paper investigates the role of financial buffer stocks in company sector decisions. A stylized.analytic model is used to consider how adjustment costs in changing dividends can generate a role for a financial buffer stock in any expenditure decision by the firm which has a influence beyond...

This paper models three alternative policy strategies for an open economy and evaluates their performance. In the first regime national monetary policies are used to achieve domestic price stability, without supporting fiscal policy and without concern for external balance. The second regime...

Analyses of the Asian crisis of 1997 have focused excessively on the financial sector, especially the banks. The role of the real sector in exposing the financial system to stress has been under-emphasized. This paper provides a real-sector explanation for Thailand's crisis, demonstrating the...