I study a model of geopolitical organization endogenizing the size of nations, of their public spending and of their degree of openness. The optimal geography may not be a stable equilibrium and the Alesina-Spolaore bias toward too many nations tends to be confirmed. However, multiple equilibria...

We examine the setting of national competition policy in a two-country setting,emphasizing the relationship of trade to the goals of competition policy (suchas the degree and nature of competition). The issues we address involve thegeneral equilibrium distributional effects of competition...

I study a model of geopolitical organization endogenizing the size of nations, of their public spending and of their degree of openness. The optimal geography may not be a stable equilibrium and the Alesina-Spolaore bias toward too many nations tends to be confirmed. However, multiple equilibria...

The paper develops a simple stochastic new open macroeconomic model in which pricesetting firms' choice between producer currency pricing and local currency pricing is endogenous. We show that, in equilibrium, firms will denominate their export price contracts in the currency of the country with...

We study financial fragility, exchange rate crises, and monetary policy in an open economy version of a Diamond-Dybvig model. The banking system, the exchange rate regime, and central bank credit policy are seen as parts of a mechanism intended to maximize social welfare; if the mechanism fails,...

The authors show that standard alternative assumptions about the currency in which firms price export goods are virtually inconsequential for the properties of aggregate variables, other than the terms of trade, in a quantitative open-economy model. This result is in contrast to a large...

This paper computes welfare maximizing Taylor-style interest rate rules, in a business cycle model of a small open economy. The model assumes staggered price setting and shocks to domestic productivity, to the world interest rate, to world inflation, and to the uncovered interest rate parity...

The paper analyzes and compares the effects of domestic monetary policy using DSGE, DSGE-VAR, and VAR based on a two-country open economy model of Korea and the U.S. According to impulse response analysis, a domestic interest rate hike raises won value in the case of DSGE and DSGE-VAR models,...

This paper studies a New Keynesian model of a two-country world with a zero lower bound (ZLB) constraint for nominal interest rates. A floating exchange rate regime is assumed. The presence of the ZLB generates multiple equilibria. The two countries can experience recurrent liquidity traps...