This paper examines the effects of policy coordination in a two-country model of endogenous growth. Governments choose taxes to provide public inputs and public consumption goods. Tax rates affect the rewards to investment and rates of economic growth. Two regimes are examined: one with...

The effects of inflation are worked out for a small open economy with Cash-in-Advance (CIA) constraints on bond purchases. If all transactions are subject to CIA constraints, an increase in the inflation rate will reduce savings, bringing about a current account deficit, while the capital stock...

The effects of inflation are considered for a small open economy with overlapping generations and a cash-in-advance constraint on consumption. In an endowment economy with one good, the model recovers the adjustment mechanism underlying the monetary approach to the balance of payments, which...