Some recent empirical findings are used to motivate employing a model in which consumption exhibits durability, and habits develop over the flow of services provided by them, in order to study the effects of tariff protection on the current account. Durability leads to adjacent substitutability...

We consider a federation with three regions and an imperfectly mobile population. If in the Nash equilibrium one region makes transfers to the other two then the outcome is efficient. If in the Nash equilibrium two regions make transfers to a third region the outcome may be inefficient, because...

A model in which consumption exhibits durability, and habits develop over the flow of services provided by them, is used to study the effects of exchange rate policies. The results of recent studies with regard to the effects of exchange rate policies are brought closer to some recent empirical...

This paper considers risk sharing among individuals within and across regions in a federation with population mobility and infinite horizons. It is shown that the regional authorities will not fully exploit gains from inter-regional risk sharing when population mobility is imperfect. However, in...

The fiscal externality model is extended to an infinite horizon setting with stochastic technologies. With imperfect population mobility some gains from risk sharing are not exploited by the regional authorities. Nevertheless, regional authorities who care about their reputation may be able to...

The implications of different cash in advance (CIA) constraints for open economies are worked out. If CIA constraints are only for consumption expenditures, changes in the rate of growth of money will have no steady state effects. If all transactions, even those involving bonds, are subject to...

The effects of exchange rate policies are examined for a small open economy in an infinite horizon model with investment, labor/leisure choice, and cash-in-advance for consumption. An increase in the rate of depreciation of the domestic currency reduces consumption and labor supply, as the...

We suggest a simple variant of Uzawa preferences which has the same predictions as his formulation, but is less prone to criticism. We assume that the rate of time preference is an increasing function of the total value of current financial assets. It is shown that an increase in the rate of...