Search Results
Conference Paper
Developing country borrowing and domestic wealth
Working Paper
The mirage of fixed exchange rates
This paper discusses the profound difficulties of maintaining fixed exchange rates in a world of expanding global capital markets. Contrary to popular wisdom, industrialized-country monetary authorities easily have the resources to defend exchange parities against virtually any private speculative attack. But if their commitment to use those resources lacks credibility with markets, the costs to the broader economy of defending an exchange-rate peg can be very high. The dynamic interplay between credibility and commitment is illustrated by the 1992 Swedish and British crises.
Working Paper
Global versus country-specific productivity shocks and the current account
The intertemporal approach to the current account is often regarded as theoretically elegant but of limited empirical significance. This paper derives highly tractable current account and investment specifications that we estimate without resorting to calibration or simulation methods. In time-series data for eight industrialized countries, we find that country-specific productivity shocks tend to worsen the current account, whereas global shocks have little effect. Both types of shock raise investment. It is a puzzle, however, for the intertemporal model that long-lasting local productivity ...
Journal Article
Globalization and global disinflation
Since the invention of money, pressure to finance government debt and deficits, directly or indirectly, has been the single most important driver of inflation. It is not at all clear, however, that improved fiscal policy has been the main driver of the recent disinflation. ; Whatever the explanation of global disinflation, the raw data are stunning. In recent years, inflation around the world has dropped to levels that, only two decades ago, seemed frustratingly unattainable. If one takes into account technical biases in the construction of the CPI, as well as central banks? desire to ...