Cover -- Half-title -- Title -- Copyright -- Contents -- List of Contributors -- Preface -- Introduction -- PART ONE FINANCIAL ISSUES IN OPEN ECONOMIES: THEORY -- ONE Crises: The Next Generation? -- 1. A Brief History of Currency Crisis Modeling -- 2. The Balance-Sheet View of Crises -- 3. Asset Prices and Crises -- 4. Financial Crisis in a Closed Economy -- References -- TWO Solutions (?) to the "Devaluation Bias": Some Preventive Measures to Defend Fixed Exchange Rates against Self-Fulfilling… -- 1.Introduction -- 2.The Self-Fulfilling Crisis Model of Obstfeld (1996) -- 3. Some Measures to Prevent Self-Fulfilling Attacks -- 3.1. Imposing an Exit Penalty or Reputational Constraint (à la Barro-Gordon (1983)) -- 3.2. Appointing a Conservative Central Banker (à la Rogoff (1985)) -- 3.3. Designing an Incentive Contract for the Central Banker (à la Walsh (1995)) -- 3.4. An Assessment of the Practicality of the Three Solutions (and Their Equivalents) -- 4. Are Currency Boards Different from Regular Pegs? -- 5. Conclusion -- 6.Appendix: Salient Features of Currency Boards -- References -- THREE Growth-Enhancing Effects of Bailout Guarantees -- 1. Introduction -- 2. Conceptual Framework -- 2.1. Distortions -- 2.2. Investment and Debt Denomination -- 2.3. Real Exchange Rate Risk -- 2.4. Equilibrium Dynamics -- 3. Policy Evaluation -- 3.1. Policies During a Boom -- 4.Conclusions -- References -- FOUR Risk and Exchange Rates -- 1. A Stochastic Two-Country Model -- 1.1. Preferences and Technology -- 1.2. Prices, Demand, and Budget Constraints -- 2. Goods Market Clearing and the Redundancy of Securities Markets -- 3. Producer Behavior under Preset Prices -- 3.1. The Price Setting Problem -- 3.2. Implications for Ex Ante Terms of Trade -- 3.3. Implications for Ex Ante Consumption -- 4. Equilibrium -- 4.1. First-Order Conditions for Consumption and Money.

4.2. Log-Linearization and the Exchange-Rate Risk Premium -- 4.3. Equilibrium Exchange Rates and the "Level" Risk Premium -- 4.4. The Short-Run Effects of Monetary Shocks -- 5. Solving for Exchange Risk Premia -- 6. The Magnitude of the "Level" Exchange Rate Risk Premium -- 7. Volatility and Welfare -- 7.1. Calculating Ex Ante Utility -- 7.2. Equality of Expected Home and Foreign Utilities -- 7.3. Country Size and the Cost of Currency Volatility -- 7.4. Quantifying the Cost of Currency Volatility -- 8. Summary -- Appendix A. Flexible-Price Output Levels and Government Spending Shocks -- A.1. Equilibrium Output with Flexible Prices -- A.2. Government Spending Shocks -- Appendix B. Optimal Price Setting by Producers Facing Monetary and Productivity Shocks -- Appendix C. An Important Special Case with an Exact Solution -- Appendix D. Ex Post Welfare Effects of Monetary Shocks -- D.1. Calculating Ex Post Welfare Effects -- D.2. The Terms of Trade and Asymmetric Transmission -- References -- PART TWO FINANCIAL ISSUES IN OPEN ECONOMIES: EMPIRICS -- FIVE Economic Integration, Industrial Specialization, and the Asymmetry of Macroeconomic Fluctuations -- 1. Introduction -- 2. Conceptual Issues -- 3. A Stylized Model of Fluctuations -- 4. Measuring the Asymmetry of Fluctuations -- 4.1. A Utility-Based Measure of Fluctuations Asymmetry -- 5. Measuring Specialization in Production -- 6. Empirical Analysis -- 6.1. Data Used -- 6.2. Asymmetry Measures and Specialization Indices -- 6.3. Regression Analysis -- 6.4. Regressions Using a Pairwise Correlation Measure of Fluctuations Asymmetry -- 7. Income Asymmetry versus GDP Asymmetry -- 8. Summary -- Appendix: A Utility-Based Measure of Fluctuations Asymmetry -- References -- SIX Uncovered Interest Parity in Crisis: The Interest Rate Defense in the 1990s -- 1. Introduction -- 2. Methodology -- 3. The Data Set.

4. UIP Regression Analysis -- 5. The Interest Rate Defense -- 5.1. The Framework -- 5.2. The Role of Excess Returns -- 6.Conclusion -- References -- SEVEN When Does Capital Account Liberalization Help More than It Hurts? -- 1. Introduction -- 2. Previous Literature -- 3. Basic Results -- 4. Sensitivity Analysis -- 5. Do These Patterns Reflect Stages of Financial and Institutional Development? -- 6. Sequencing -- 7. Conclusion -- Data Appendix -- References -- EIGHT Sources of Inflation in Developing Countries -- 1. Introduction -- 2. Econometric Method -- 3. Data -- 4. Specifications and Results -- 4.1. Ordering of the Variables -- 4.2. Importance of the Six Factors as Influences on Inflation -- 4.3. Response of Inflation to Shocks -- 4.4. Sensitivity Analysis -- 5. Conclusions -- References -- PART THREE ECONOMIC GROWTH: THEORY AND EMPIRICS -- NINE Growth Effects and the Cost of Business Cycles -- 1. Introduction -- 2. A Model of Endogenous Growth -- 2.1. Growth Effects through the Level of Investment -- 2.2. Growth Effects through Investment Volatility -- 3. Quantitative Analysis -- 4. Conclusion -- References -- TEN Explaining Economic Growth -- 1. Evidence -- 2. A Note on Technology -- 3. Explanations - An Overview -- 4. Empirics of the Solow and Related Models -- 5. The Implemented Technology -- 5.1. Some Implications -- 6. Consequences -- 7. Cross-Country Agricultural Production Function -- 8. Empirical Results -- 9. Concluding Remarks -- Appendix: Estimates of Growth Models -- References -- PART FOUR PUBLIC ECONOMICS -- ELEVEN Simulating Fundamental Tax Reform in the United States -- 1.The Model -- 1.1. Demographic Structure -- 1.2. Preferences and Household Budget Constraints -- 1.3. The Government -- 1.4. Firms and Technology -- 2. Calibration -- 2.1. Earnings Ability Profiles -- 2.2. Fiscal Structure -- 2.3. Preferences and Technology.

2.4. Solving the Model -- 2.5. The Benchmark Equilibrium -- 3. Initial Tax Reform Simulations -- 3.1. A Proportional Income Tax -- 3.2. A Proportional Consumption Tax -- 3.3. The Flat Tax -- 3.4. The Flat Tax with Transition Relief -- 3.5. The X Tax -- 4. Sensitivity Analysis -- 5. Summary and Conclusion -- Appendix -- Labor Supply Elasticities -- Calculation of Earnings Ability Profiles -- References -- TWELVE The International Macroeconomics of Taxation and the Case against European Tax Harmonization -- 1. Introduction -- 2. A 'Workhorse' Dynamic Equilibrium Model of Taxation in Open Economies -- 2.1. Structure of the Model -- 2.2. Stationary Equilibrium, Calibration and Design of Tax Policy Experiments -- 2.3. The International Transmission Channels of Tax Policy -- 3. The Case Against European Tax Harmonization -- 3.1. Identifying the Tax Policy Transmission Channels: Unilateral Tax Cuts -- 3.2. European Tax Harmonization -- 4. Concluding Remarks: If Harmonization Is Undesirable, What Then? -- References -- THIRTEEN Home Bias in Portfolios and Taxation of Asset Income -- 1. Portfolio Specialization in an Open Economy -- 1.1. Equilibrium When Domestic Prices Are Stabilized -- 1.2. Equilibrium When Exchange Rates Are Stabilized -- 2. Price vs. Exchange Rate Stability and International Capital Mobility -- 3. Implications of Stochastic Prices for Taxes on Asset Income -- 3.1. Tax Policy in a Nonstochastic Setting -- 3.2. Tax Policy When Exchange Rates Are Stochastic -- 3.3. Tax Policy when Domestic Prices Are Stochastic -- 4. Conclusions -- References -- FOURTEEN Social Dumping in the Transformation Process? -- 1. The Accusation of Social Dumping -- 2. Redistribution vs. Wages in Kind -- 3. Why Are the Differences in Direct and Indirect Wage Costs So High? -- 4. A Simple Model of the Economic Catching-up Process.

5. The Policy of the National Government -- 6. The Overall Welfare Optimum -- 7. The Properties of the Catching-Up Process -- 8. Lessons from German Unification -- 9. Why Low Wages and Social Standards Do Not Indicate Social Dumping -- References -- PART FIVE POLITICAL ECONOMY -- FIFTEEN Do Political Institutions Shape Economic Policy? -- 1. Initial Remarks -- 2. Theoretical Ideas -- 2.1. An Organizing Framework -- 2.2. General Ideas -- 2.3.Specific Predictions -- 2.4. Discussion -- 3. Data and Specification -- 4. Empirical Regularities? -- 4.1. Size of Government -- 4.2. Composition of Government -- 4.3. Corruption -- 5. Final Remarks -- References -- Author Index -- Subject Index.

This book contains fifteen major essays on international economics.

Description based on publisher supplied metadata and other sources.

Electronic reproduction. Ann Arbor, Michigan : ProQuest Ebook Central, 2018. Available via World Wide Web. Access may be limited to ProQuest Ebook Central affiliated libraries.