This paper studies the design of monetary policy in small open economies with domestic and cross-border production networks and nominal rigidities. The monetary policy that closes the domestic output gap is nearly optimal and is implemented by stabilizing the aggregate inflation index that...

This paper studies the design of monetary policy in small open economies with domestic and cross-border production networks and nominal rigidities. The monetary policy that closes the domestic output gap is nearly optimal and is implemented by stabilizing the aggregate inflation index that...

We present an open economy growth model incorporating various elements of fiscal policy, including government expenditure on education and public capital (infrastructure), budget deficit, internal and external public debt, public consumption, and four tax rates. This detailed description of...

We study how monetary policy shapes the aggregate and distributional effects of an energy price shock. Based on the observed heterogeneity in consumption exposures to energy and household wealth, we build a quantitative small open-economy HANK model that matches salient features of the Euro Area...

This paper studies inflation in small open economies with production networks. I show that production networks alter the elasticity of the consumer price index (CPI) to changes in sectoral technology, factor prices, and import prices. Sectors can import and export directly but also indirectly...

This paper presents a stock-flow-consistent model in which growth is led by exports and government expenditure. It considers domestic and external debt dynamics and gross capital flows. Countries may choose to not fully use their external space to accumulate international reserves. The model is...

This paper reviews the application of two-country Dynamic Stochastic General Equilibrium (DSGE) models in the case of the euro area. By employing a search strategy across Scopus and Web of Science databases, this review identifies "Key Papers" that develop, calibrate, or estimate DSGE models for...

This paper shows that less generous unemployment benefits in one country may generate substantial negative long-run consumption spillovers to non-reforming countries under incomplete consumption insurance. While lower benefits reduce unemployment in the reforming country, employed workers...

This paper expands Baranzini's (1991) approach by introducing the assumption of an open economy to a model of capital accumulation in an intergenerational framework. Our results show the importance of government activity and foreign trade interrelations in determining the path of the income...

As the environmental sustainability effectiveness of various political systems is taken into consideration, it is doubtful as to whether the presumption of the overall efficiency of democracy can be sustained in global governance architecture. The effectiveness of autocracies and democracies...

The article develops a stylized medium-run post-Kaleckian open economy model with conflict inflation and combines two existing specifications of the income share targets of workers and firms. In the model, only the target of firms is directly affected by the real exchange rate. Workers do not...

Austria is a small open economy that in the last decades underwent two different waves of increasing trade integration: one with Eastern Europe and one with China. Drawing on trade theory, this paper studies the effects of increases in trade with China and Eastern Europe on labour market...

We solve a canonical, estimated, medium-sized, open-economy New Keynesian model, cast it into a small-scale population vector autoregression, and assess whether best-practice structural identifications detect textbook "overshooting" after a monetary policy hike-i.e., an instant real appreciation...

Observed international investment positions and cross-country heterogeneity in rates of return to capital are hard to reconcile with frictionless capital markets. In this paper, we develop a theory of international capital allocation: a multi-country dynamic spatial general equilibrium model in...

Developing countries have greatly benefited from globalization, coinciding with economic growth and structural transformation. The standard trade theory postulates that trade openness contributes to poverty alleviation directly by changing factor proportions of production and indirectly through...

In the classical approach, one of the main measures of productivity is the so-called 'total labour productivity' (TLP), which can be computed as the reciprocal of the vertically integrated labour required to produce one unit of net output. In closed economies, this index changes exclusively due...