We show that the composition of imports has important implications for the optimal volatility of the exchange rate. Using input-output data for 25 countries we document substantial differences in the import and non-tradable content of final demand components, and in the role played by imported...

We show that the composition of imports has important implications for the optimal volatility of the exchange rate. Using input-output data for 25 countries we document substantial differences in the import and non-tradable content of final demand components, and in the role played by imported...

Over the last twenty years the level and volatility of inflation decreased across industrial countries. The inflation behaviour can be explained by a shift in monetary policy or by a lucky period of low volatility in business cycle shocks. To test the"luck hypothesis" we examine the inflation...