This paper develops a methodology for evaluating the short-run welfare implications of different exchange rate regimes. Heterogeneous, optimizing domestic consumers live for two periods, consume goods and leisure, supply labor, save home and foreign bonds, and demand currency. Firms maximize...

We explain the rapid increase in personal savings in China since the economic liberalization which began in 1979. We use an intertemporal disequilibrium framework based upon a virtual price technique. The virtual price is defined as the price level that would induce the observed level of...