abstract in this paper, the effect of foreign sector macro-variable on inflation dynamics and firms’ pricing behavior has been investigated in the context of a small open economy new keynesian phillips curve. this curve is derived and estimated for a developing oil-exporting economy suffering from dutch disease. this version of nkpc is an extension of leith and malley’s (2007) small open econom...

 Outward-oriented economies seem to grow faster than inward-looking ones. Does the literature on convergence have anything to say on this? In the dynamic Heckscher-Ohlin-Samuelson model, with factor-price equalization, there is no convergence of incomes. This is because with identical preferences and return to capital, irrespective of initial levels the growth rates of consumption are the same....

â â â â â â  â  abstract â  outward-oriented economies seem to grow faster than inward-looking ones. does the literature on convergence have anything to say on this? in the dynamic heckscher-ohlin-samuelson model, with factor-price equalization, there is no convergence of incomes. this is because with identical preferences and return to capital, irrespective of initial levels the growth rates o...

Abstract In this paper, the effect of foreign sector macro-variable on inflation dynamics and firms’ pricing behavior has been investigated in the context of a small open economy New Keynesian Phillips Curve. This curve is derived and estimated for a developing oil-exporting economy suffering from Dutch Disease. This version of NKPC is an extension of Leith and Malley’s (2007) small open econom...

We would like to thank Philip Lowe, Lars Svensson and David Gruen for helpful suggestions. We are extremely grateful to Luci Ellis for training us in the use of Mathematica 3.0. Any remaining errors are ours. The views expressed are those of the authors and should not be attributed to the Reserve Bank of Australia.

The small open economy model with incomplete asset markets features a steady-state that depends on initial conditions and equilibrium dynamics that possess a random walk component. A number of modifications to the standard model have been proposed to induce stationarity. This paper presents a quantitative comparison of these alternative approaches. Five different specifications are considered: ...

California has embarked on a bold experiment in trying to reduce carbon emissions without causing undue harm to the state’s economy. The goal is made more difficult by the State’s inability to erect protective tariffs to restrict imports from states and countries without costly carbon regulations. Without coordinated international action to reduce greenhouse gas emissions, this is the same prob...

This paper analyzes the role of nominal assets in ranking intertemporal budget policies in a growing open economy. The budget policies are ranked in terms of the public's intertemporal stock of tax liabilities. Our main result is that, in a small open economy, the valuation of private and public assets is in terms of the exogenous foreign price level under purchasing power parity. This constrai...

This paper considers a small open economy where government pursues debt targeting policy. In this setting, I find the optimal debt targeting rule crucially hinges on the assumption of bond market structure, i.e. whether household can purchase state-contingent bond. In addition, the country’s foreign asset holding and government’s debt level may have substantial impact on the optimal debt target...