Non-coordinated monetary policy is analysed in a stochastic two-country general equilibrium model. Non-coordinated equilibria are compared in two cases: one where policy is set in terms of state-contingent money supply rules, and one where policy is set in terms of state-contingent nominal...

Using a stochastic business cycle model of a small open economy we ask how the problem of the optimizing policy-maker changes endogenously as the international trade structure is altered. From input-output data for OECD and emerging market economies, we document that differences in trade across...

risky assets, if asset markets are integrated across the board, reflecting a strong pressure towards the cross-border equalization of external finance premia faced by levered investors. In turn, the resulting global flight to quality may bring about tight international linkages in...