Chinese policy-makers fear that an RMB appreciation will reduce low technology exports. We investigate this issue using data on China's exports to 30 countries. We find that an appreciation of the RMB would substantially reduce China's exports of clothing, furniture and footwear. We also find...

Large recent surpluses in the social security trust fund accounts provide the potential to increase overall national saving and capital formation. However, these surpluses instead have allowed politicians to increase the non-social security deficit and government consumption. Copyright 1992...

Romer and Romer (2000) reported that federal funds rate increases may raise expected inflation by revealing the Federal Reserve’s private information about inflation. Gurkaynak, Sack, and Swanson (2005a) presented evidence that funds rate increases lowered long-term expected inflation. To...

The North American Free Trade Agreement (NAFTA) passed Congress amidst contentious debate in 1993. Detractors argued that it would produce an exodus of jobs while proponents argued that it would create jobs. We examine the economic effects of NAFTA. The evidence indicates that while the...

Inflation targeting has become an increasingly popular strategy for setting monetary policy during the last decade. While no countries had formal inflation targets before 1990, currently 22 countries use inflation targeting. One notable exception is the United States, where the Federal Reserve...

The Federal Reserve currently pursues both price stability and full employment. Congress is debating whether to make price stability the overriding goal of monetary policy. This paper argues against such a change for several reasons. First, under the current mandate the U.S. has experienced low...

East Asia is characterized by intricate production and distribution networks that allow fragmented production blocks to be allocated across countries based on comparative advantage. These networks have produced enormous efficiency gains. Exchange rate volatility, by increasing uncertainty, may...