In this paper we construct a dynamic stochastic general equilibrium model for a small open economy allowing for perfect capital mobility. The model incorporates price rigidities in monopolistically competitive goods and labor markets and real rigidities in the form of capital adjustment costs....

As the Spanish economy gets more integrated in international markets, competitiveness becomes a key determinant of the monetary transmission. In this paper we trace out the dynamic response of prices, output and the exchange rate following a monetary policy shock. We estimate a structural VAR...

The liquidity effect, defined as a decrease in nominal interest rates in response to a monetary expansion, is a major stylized fact of the business cycle. This paper seeks to understand under what conditions such an effect can be explained in a general equilibrium model with sticky prices and...

In this paper we test the convergence hypothesis among OECD economies from 1960 to 1990. The empirical growth literature has found in the OECD the best example of a homogenous group of countries in which the convergence proposition of the constant returns growth model is likely to hold. We...

The main contribution of this paper is to jointly estimate the effects of financial development and inflation on growth. We aim to exploit both the cross-section and the time-series dimension of the data on inflation, growth and some banking and stock market indicators over the period 1961-1993...

This paper is an attempt to provide an updated assessment of what we know and what do not know about the impact of monetary policy on the economy and what implications follow for the conduct of monetary policy in today's world. Firstly, we discuss the conditions under which monetary policy can...

This paper provides empirical evidence on the effectiveness of movements in nominal exchange rates in smooting cyclical imbalances between countries, as explained by the literature on optimal currency areas.