This paper attempts to determine the extent to which common external shocks explain simultaneous currency crises. We define crises on a country by country basis using a new criterion that takes into account variations in the volatility of exchange rates over time and across countries. Using a...

Does a country's (long-term) growth depend upon what happens in countries that are nearby? Such linkages could occur for a variety of reasons, including demand and technology spillovers. We present a series of tests to determine the existence of such relationships and the forms that they might...

Does a country's long-term growth depend on what happens in countries that are nearby? Such linkages could occur for a variety of reasons, including demand and technology spillovers. We present a series of tests to determine the existence of such relationships and the forms that they might take....

This paper derives a closed-form solution for the optimal discretionary monetary policy in a small macroeconomic model that allows for varying degrees of forward-looking behavior. We show that a more forward-looking aggregate demand equation serves to attenuate the response to inflation and the...

The share of employment in manufacturing as well as the relative price of manufactures has declined sharply over the postwar period, while the share of manufacturing output relative to GDP has remained roughly constant. Household preferences turn out to play a key role in reconciling this...

Whether prices are pro- or counter-cyclical represents a major difference in the predictions of models that focus on aggregate demand shocks as the primary source of business cycle fluctuations, versus those that emphasize shocks to aggregate supply. Earlier studies have interpreted their...

We use vector autoregressions to examine the behavior of the velocities of alternative monetary aggregates, focusing on the role of disinflation and deregulation during the 1980s. By estimating a single system that contains income, prices, interest rates and the components of M3, we are able to...