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Working Paper
Realignment of the yen-dollar exchange rate: aspects of the adjustment process in Japan
The paper first surveys recent estimates of the appropriate yen dollar exchange rate that have been proposed in the literature. Most of the more careful estimates suggest that the yen was substantially undervalued against the dollar in early 1985 when it began its steep ascent and some of the estimates suggest that further appreciation from today's strong level is warranted. ; We then turn to the adjustment process. First, we present evidence that a narrowing of Japan's record trade surplus has already started to occur, particularly in real terms. Next, we show that external adjustment has ...
Working Paper
A method for solving systems of first order linear homogeneous differential equations when the elements of the forcing vector are modelled as step functions
This paper presents a method for solving a system of first order linear differential equations with constant coefficients when the elements of the forcing vector are step functions. The analysis presented in the text has been programmed for use in the computer simulation of linear continuous time rational expectations models using any combination of anticipated and unanticipated, permanent or temporary shocks. The program entitled "JAB" is available from the author upon request.
Working Paper
Anticipated fiscal contraction: the economic consequences of the announcement of Gramm-Rudman-Hollings
The announcement of a plan to cut the U.S. federal budget deficit through the Gramm-Rudman-Hollings legislation provides an excellent opportunity to examine the influence of expectations on economic behavior. This paper presents a small forward-looking macroeconomic model and simulates the effects of the announcement of a multistaged reduction in the fiscal deficit. Open and closed economy specifications are compared and contrasted to highlight the importance of international transmission mechanisms in macroeconomic adjustment. The results of the simulations are compared with the stylized ...
Journal Article
U.S. international transactions in 1985
Working Paper
Incomplete insurance, irreversible investment, and the microfoundations of financial intermediation
The financial intermediary is shown to result from a market imperfection related to the costly monitoring of the actions of consumers. In such an environment complete insurance is not obtainable and consumers respond by holding some of their wealth as precautionary balances in order to self-insure. Precautionary balances are those financial vehicles which permit one to invest and then liquidate with the smallest amount of loss because of the "sunk costs" associated with the transaction. An economy of N identical consumers is created and it is shown that a financial intermediary which ...
Working Paper
Expected fiscal policy and the recession of 1982
Conference Paper
What do budget deficits do? (commentary)