The Hausman test is used in applied economic work as a test of misspecification. It is most commonly thought of as a test of whether one or more explanatory variables in a regression model are endogenous. The usual Hausman contrast test requires one estimator to be efficient under the null...

Using annual consumer price index (CPI) data for 17 U.S. cities between 1918 and 2007, this paper examines the implications of the choice of numeraire city for the behavior of relative prices across cities. A common factor representation of relative price is used to understand the nature of the...

Following the financial crisis, many countries introduced fiscal stimulus packages making budget consolidations in the future rather challenging. Using a data set for 28 OECD countries spanning the period 1978-2007, we contribute to the literature on success probabilities of consolidation...

The target zone model by Krugman (1991) assumes that foreign exchange intervention targets exchange rate levels. We argue that the fit of this model depends on the stage of development of capital markets. Foreign exchange intervention of countries with highly developed capital markets is in line...