Recent empirical research into the macroeconomic effects of fiscal policy shocks has generated a puzzle. Both Keynesian and Real Business Cycle models predict that a fiscal expansion will lead to a real exchange rate appreciation. However, in almost all the countries that have been studied,...

Monetary history is characterised by crisis and reform. The paper is dedicated to an explanation of what makes monetary reforms successful. A cross-sectional econometric analysis is chosen to deal with this problem. It is based on a standard macroeconomic model of commitment and credibility. As...