Many economic booms have been accompanied by a real exchange rate appreciation, a large trade deficit and a deteriorating traded sector, and have raised the question of the desirability of some stabilization policy. We characterize the dynamics created by an expected productivity rise in an open...

This study inspects if there is greater convergence with Germany amongst the eurozone founding members and if their relations with the hegemonic economy have been more symmetrical after euroization. The dimensions explored are those inspired by the optimum currency areas (OCA) framework. To some...

This paper deploys a simple stock-flow consistent (SFC) model in order to examine various contentions regarding fiscal and monetary policy. It follows from the model that if the fiscal stance is not set in the appropriate fashion that is, at a well-defined level and growth rate - then full...

This study develops a dynamic stochastic general equilibrium model to account for the differences in fiscal policy stance over the business cycle between developed and emerging market countries, and, in particular, for the volatile and procyclical government consumption and transfer payment in...

The IS-LM model has largely contributed to the spread of a belief that a reduction of fiscal deficit has to lead to a drop in output in the short term. However, if one modifies even a single assumption of that model, the relationship between change in output and fiscal deficit respectively may...

Most developing countries have imposed restrictions on domestic and international financial transactions at one time or another. Such restrictions have allowed governments to generate significant proportions of their revenues from financial repression while restraining inflation. The eventual...

This paper evaluates the macroeconomic impact of a programme for public infrastructure spending in the euro area (EA) under alternative assumptions about funding sources and the monetary policy stance. The quantitative assessment is made by simulating a dynamic general equilibrium model of a...

Many years since their introduction, positive theories of inflation have rarely been tested. This paper documents a negative relationship between inflation and the welfare state (proxied by the parameters of the unemployment benefit program) that is to be expected in such theories. Because...

For over two years, the world has been battling the health and economic consequences of the COVID-19 pandemic. This paper provides an account of the worldwide economic impact of the COVID-19 shock, measured by GDP growth, employment, government spending, monetary policy, and trade. We find that...