price and trade effects of exchange rate fluctuations and the design of policy coordination abstract we analyze a two country zone facing a joint inflationary shock and responding with coordinated and uncoordinated monetary and fiscal policies we show that the standard presumption that the absence of coordination results in an excessive exchange rate appreciation of the zone with respect to the rest of the world hinges on a specific assumption within the two countries considered the price effect of exchange rate fluctuations dominates the trade effects relative to the corresponding effects via a vis the rest of the world if the relative hierarchy goes the other way around as we argue is likely for ec countries the standard conclusion is reversed a result of insufficiently active monetary and fiscal policies the paper also considers asymmetric shocks as well as monetary policy coordination

non parametric production analysis in non competitive environments we extend the non parametric methodology for empirical production analysis to deal with endogenous prices as price endogeneity is often complemented by price uncertainty we consider both the case of certain prices and the case of uncertain prices the extensions are fully compatible with existing tools for eliciting and representing technology and price information and preserves the tractable mathematical programming structure of the original methodology an empirical application to the dutch electricity distribution sector illustrates our extension

a nonparametric cost approach to scale efficiency starting with farrell fieldhouse 1962 a host of notiparametric models have been developed for calculation of scale efficiency a common property of these models is that they are specified in terms of input output data duality theory has taught us that technological characteristics may be analyzed from either the primal or the dual cost side the purpose of this paper is to introduce a nonparametric dual method of calculating scale efficiency

japanese and u s firms as foreign investors do they march to the same tune during the 1980s u s and japanese multinationals were attracted by some similar country characteristics low wage inflation low country risk good infrastructure and an educated work force both groups of investors displayed a persistence being strongly attracted to locations with significant past investment japanese firms started the decade as somewhat more fluid but as their investment levels surged they became much more persistent overall u s firms were more influenced by domestic market conditions and moved contrary to changes in host country trade intensity japanese investment had a somewhat greater affinity for trade reflecting their long standing interest in east asia some limited evidence suggests that factors driving the two groups of investors converged in the second half of the 1980s

international monetary and fiscal policy cooperation in the presence of wage inflexibilities abstract this paper studies the transmission mechanisms and welfare implications of strategic monetary and fiscal policy in a two country mundell fleming variable supply stochastic model the issue of the counterproductivity of policy cooperation raised by rogoff 1985 is examined and extended to fiscal policy it is established that systematic fiscal policy cooperation is productive for a wide range of parameter values that include those of the simple keynesian model cooperation is always productive for policy that is contingent on the realisation of shocks

informational externalities strategic delay and optimal investment subsidies this paper examines optimal government policy when private investment generates information but investors cannot internalize the informational value their actions have to others equilibrium exhibits inefficient delay as investors adopt a wait and see approach the government can alter incentives via an investment subsidy but complications arise since future subsidies may induce investors to disregard current policy initiatives the paper shows that the government achieves its desired outcome only when the the investment subsidy is financed by a non distortionary lump sum tax when taxation is distortionary the government faces a time inconsistency problem that may prevent effective policy ce texte examine la politique optimale du gouvernement quand l investissement prive engendre de l information mais que les investisseurs ne peuvent pas internaliser la valeur informationnelle que leurs actions ont sur les autres l equilibre est marque par des delais inefficaces a proportion que les investisseurs adoptent une attitude attendre pour voir le gouvernement peut modifier les incitations en creant une subvention a l investissement mais des complications sont possibles puisque des subventions possibles dans l avenir peuvent amener les investisseurs a ne pas se prevaloir des initiatives mises de l avant par la politique courante le texte montre que le gouvernement atteint le resultat desire seulement quand la subvention a l investissement est finance par une taxe forfaitaire non distorsionnante quand la taxe cree des distorsions le gouvernement fait face a un probleme d inconsistance dans le temps qui empeche que la politique soit effective

some models for estimating technical and scale inefficiencies in data envelopment analysis in management contexts mathematical programming is usually used to evaluate a collection of possible alternative courses of action en route to selecting one which is best in this capacity mathematical programming serves as a planning aid to management data envelopment analysis reverses this role and employs mathematical programming to obtain ex post facto evaluations of the relative efficiency of management accomplishments however they may have been planned or executed mathematical programming is thereby extended for use as a tool for control and evaluation of past accomplishments as well as a tool to aid in planning future activities the ccr ratio form introduced by charnes cooper and rhodes as part of their data envelopment analysis approach comprehends both technical and scale inefficiencies via the optimal value of the ratio form as obtained directly from the data without requiring a priori specification of weights and or explicit delineation of assumed functional forms of relations between inputs and outputs a separation into technical and scale efficiencies is accomplished by the methods developed in this paper without altering the latter conditions for use of dea directly on observational data technical inefficiencies are identified with failures to achieve best possible output levels and or usage of excessive amounts of inputs methods for identifying and correcting the magnitudes of these inefficiencies as supplied in prior work are illustrated in the present paper a new separate variable is introduced which makes it possible to determine whether operations were conducted in regions of increasing constant or decreasing returns to scale in multiple input and multiple output situations the results are discussed and related not only to classical single output economics but also to more modern versions of economics which are identified with contestable market theories

international coordination in the design of macroeconomic policy rules abstract the paper examines international issues that arise in the design and evaluation of macroeconomic policy rules it begins with a theoretical investigation of the effects of fiscal and monetary policy in a two country rational expectations model with staggered wage and price setting and with perfect capital mobility the results indicate that with the appropriate choice of policies and with flexible exchange rates demand shocks need not give rise to international externalities or coordination issues price shocks however do create an externality and this is the focus of the empirical part of the paper using a simple seven country model consisting of canada france germany italy japan the united kingdom and the united states optimal cooperative and non cooperative nash policy rules to minimize the variance of output and inflation in each country are calculated the cooperative policies are computed using standard dynamic stochastic programming techniques and the non cooperative policies are computed using an algorithm developed by finn kydland the central result is that the cooperative policy rules for these countries are more accommodative to inflation than the non cooperative policy rules

measuring economic efficiency with incomplete price information with an application to european commercial banks measuring economic efficiency requires complete price information while resorting to technical efficiency exclusively does not allow one to utilise any price information in most studies at least some information on the prices is available from theory or practical knowledge of the industry under evaluation in this paper we extend the theory of efficiency measurement to accommodate incomplete price information by deriving upper and lower bounds for farrell s overall economic efficiency the bounds typically give a better approximation for economic efficiency than technical efficiency measures that use no price data whatsoever from an operational point of view we derive new data envelopment analysis dea models for computing these bounds using standard linear programming the practical application of these estimators is illustrated with an empirical application to large european union commercial banks

platform investments and volatile exchange rates direct investment in the u s by japanese electronic companies this study examines the effects of previous entry on the subsequent decisions of japanese electronics companies to invest in the united states by gathering data at the firm level the empirical analysis provides a fine grain sorting out of firm and industry effects on foreign direct investment decisions the findings show that investment behavior is highly heterogeneous across firms and reflects their individual technological capabilities and their history of previous investments in the united states real exchange rate levels are also important the results suggest that initial investments serve as platforms for subsequent entry with the timing of entry triggered by movements in real exchange rates copyright 1996 by mit press

delegation in international monetary policy games abstract in this paper we show that delegation of monetary policy to an independent and more conservative central banker is an optimal policy in a multi country framework with monetary spillovers among countries even in the absence of time inconsistency credibility issues we also study the welfare implications of delegating monetary policy and extend our analysis to the case of coordination of monetary policies

private information for foreign investment in emerging economies in previous studies it has been found that new foreign investment is signifi cantly related to the stock of existing investment in the country0region this paper s contribution is the finding that a japanese firm s new investment in an emerging econ omy is positively correlated with its own previous investment in that economy and also with the current0planned investments by competitors these two channels are primar ily substitutes that is investment by competitors becomes less salient when the firm has experience in the market the correlated behaviour is not explained by industrial agglom erations but appears to reflect the value of private information to investment in emerging economies information privee et investissement etranger dans les economies en emergence des travaux anterieurs ont montre que les nouveaux investissements a l etranger sont co relies de maniere significative a la taille du stock d investissement etranger dans le pays ou la region la contribution de ce memoire porte sur le fait qu un nouvel investissement d une entreprise japonaise dans une economie en emergence est co relie positivement avec son propre niveau anterieur d investissement dans cette economie mais aussi avec le niveau des investissements presents et anticipes de ses concurrents ces deux canaux d information sont des substituts le niveau d investissement par les concurrents devient moins important a proportion que l entreprise a acquis de l experience dans ce marche ce comportement co relie n est pas explique par les effets d agglomeration industrielle mais semble refleter la valeur de l information privee quand on investit dans des economies en emergence

u s monetary regimes and optimal monetary policy in the euro area monetary policy in the united states has been documented to have switched from reacting weakly to inflation fluctuations during the 1970s to fighting inflation aggressively from the early 1980s onward in this paper i analyze the impact of the u s monetary policy regime switches on the eurozone i construct a new keynesian two country model where foreign u s monetary policy switches regimes over time i estimate the model for the u s and the euro area using quarterly data and find that the united states has switched between those two regimes in line with existing evidence i show that foreign regime switches affect home eurozone inflation and output volatility and their responses to shocks substantially as long as the home central bank commits to a time invariant interest rate rule reacting to domestic conditions only optimal policy in the home country instead requires that the home central bank reacts strongly to domestic producer price inflation and to international variables such as imported goods relative prices in fact i show that currency misalignments and relative prices play a crucial role in the transmission of foreign monetary policy regime switches internationally interestingly i show that only marginal gains arise for the euro area when the european central bank ecb adjusts its policy according to the monetary regime in the united states thus a simple time invariant monetary policy rule with a strong reaction to producer price index ppi inflation and relative prices is enough to counteract the effects of monetary policy switches in the united states

exchange intervention policy in a multiple country world abstract intervention policy is examined in a three country model employment and output in each country depend upon the domestic currency value of a natural basket of currencies called the sally each country will find it desirable to intervene to stabilize its sally rate if capital movements are more volatile than trade flows this is a natural generalization of well known small country results however in this general equilibrium setting it is clear that such a policy can destabilize employment in another country and lead to retaliation currency unions are also examined and found to have similar spillover problems

the role of a fixed exchange rate system when central bankers are independent abstract in a symmetric model a fixed exchange rate system allows us to reach the cooperative solution in the game between central bankers however as cooperation can be counterproductive such a property may not be beneficial here we reconsider this issue by introducing independent central bankers who need not share the social preferences we show that when countries choose their central bankers cooperatively cooperation between central bankers is neither productive nor counterproductive making fixed and flexible rates equivalent however when central bankers are chosen non cooperatively a fixed rate is better central bankers being too conservative under a flexible rate

technical and scale efficiency of japanese commerical banks a non parametric approach not only are the nature and extent and scale efficiency of japanese commerical banks studied but a relationship between both organizational status and size efficiency is also announced the efficiency measures are computed from a 1990 sample of cross sectional data for the estimation we employ the non parametric approach which has recently been gaining popularity for the studies of banking efficiency outside japan

inflation starts in latin america and the caribbean high rates of inflation are a perennial problem in latin american and caribbean lac countries this article attempts to identify the factors that initiate these inflationary episodes using observations on 31 lac countries between 1970 and 2006 the study finds that the key determinants of inflation starts in the region are demand pressures oil price shocks elections transitions to less repressive political regimes and foreign inflation

when international policy coordination matters an empirical analysis the interdependence of national economies implies externalities in policy making and these externalities lead to inefficient outcomes when policy makers are decentralized and independent these externalities have been well documented from a theoretical point of view this paper reports our attempts to discover when and if policy coordination matters using the liverpool world model which exhibits strong spillover effects for monetary policy and would therefore we thought yield very different results from those of earlier researchers however strong spillover effects do not guarantee that cooperative policies will differ much from the uncooperative other aspects of the game s structure can be equally important indeed we found many plausible game situations in which the uncooperative and cooperative solutions are so close together as to be operationally indistinguishable given the precision with which central banks seem to be able to control their money supplies we also found situations in which c

anticipating the consequences of school reform a new use of dea we use dea type linear programming techniques to simulate a basic component of educational reform eliminating restrictions on the allocation of school personnel our technique allows us to identify potential output gains or equivalently potential cost savings from reform we can also identify which personnel groups are likely to gain and lose under this reform when we apply our model to a sample of texas school districts we find evidence that the educational establishment has substantial economic rents to protect from school reform and that the primary beneficiaries of reform are likely to be affluent school districts with few minority students the technique which relies on the relationship between the direct and indirect distance functions can be easily generalized to measure the potential gains from removing other input restrictions such as union work rules environmental regulations or deed restrictions

information costs agglomeration economies and the location of foreign direct investment in china1 he c 2002 information costs agglomeration economies and the location of foreign direct investment in china reg studies 36 1029 1036 foreign investors suffer from adverse information asymmetry and face internal and external uncertainties in host economies better access to information and a variety of agglomeration economies could attenuate the disadvantages that foreign investors encounter statistical results strongly buttress the argument that foreign investors are inclined to favour such locations that could minimize information costs and offer a variety of agglomeration economies theoretical and policy implications and further research directions are discussed at the end 1 this paper was presented at the 63rd annual meeting of the association of pacific coast geographers sept 13 16 2000 arcata ca

data envelopment analysis on a relaxed set of assumptions data envelopment analysis is a procedure for evaluation of the relative efficiency of units in a production system dea involves construction of composite units as convex combinations of other units inputs and outputs under various conditions related to returns to scale the assumption of convexity is inconsistent with increasing returns to scale and not implied by constant or non increasing returns to scale an alternative dea approach which does not invoke the assumption of a convex production possibility set is developed in this paper it is implemented in two stages stage one is concerned with the spanning of isoquants and stage two with an evaluation of the position of an observed input output combination compared to the isoquants both stages involve linear programming techniques solely

currency areas international monetary regimes and the employment inflation tradeoff we show that the employment inflation tradeoff facing a central bank depends on the size of the economy for which it sets monetary policy for inflation averse central banks the tradeoff improves the smaller the relevant economy the tradeoff facing the region whose central bank controls the exchange rate in a managed exchange rate regime does not change moving to a symmetric flexible exchange rate regime instead the core region in an asymmetric regime faces a worse tradeoff than under flexible exchange rates equipped with these results we explore the issue of the optimal size of a currency area both in a two and in a three region world 1998 elsevier science b v

monetary accommodation of supply shocks under rational expectations in dealing with the expectationists arguments i will divide them somewhat artificially into two groups arguments in the first group which i call present disaster arguments allege that econometric models err by understating the reaction of inflationary expectations for example it is claimed that a policy of monetary accommodation would increase inflationary expectations shift the short run phillips curve upward and defeat the purpose of the expansionary policy arguments in the second group which i call future disaster arguments are more subtle but also more elusive the idea is that by informing private agents that it will accommodate supply shocks in the future the monetary authority would exacerbate the downward rigidity of wages and prices thus making it more difficult to deal with future supply shocks such arguments are cases of the lucas 12 econometric policy critique since they suggest that policy changes will cause parameter shifts neither of these arguments is implausible on its face the problem is that it is hard to know how to evaluate them until they are formalized in theoretical models and then tested empirically this paper takes one small step in that direction by augmenting two popular macro models with rational expectations so that they are capable of dealing with supply shocks and then examining both the present and future disaster arguments in the context of each this abstract was borrowed from another version of this item

designing targeting rules for international monetary policy cooperation this study analyzes a two country dynamic general equilibrium model with nominal rigidities monopolistic competition and producer currency pricing a quadratic approximation to the utility of the consumers is derived and assumed as the policy objective function of the policymakers it is shown that only under special conditions there are no gains from cooperation and moreover that the paths of the exchange rate and prices in the constrained efficient solution depend on the kind of disturbance that affects the economy it might be the case either for fixed or floating exchange rates despite this result simple targeting rules that involve only targets for the growth of output and for both domestic gdp and cpi inflation rates can replicate the cooperative allocation

international cooperation and exchange rate stabilization abstract we show that exchange rate stabilization can be viewed as a public good consequently when countries do not coordinate their economic policies the exchange rate fluctuates more than in the case of international cooperation we consider a quite standard two country model where the policymakers of each country have at their disposal one policy instrument the money stock and want to reduce the fluctuations of both the domestic output and the domestic price level then we compare the non cooperative nash equilibrium to the set of pareto optima our analysis provides a formal argument for some exchange rate stabilization

cost effectiveness measures on convex and nonconvex technologies abstract camanho and dyson 2005 extended shephard s 1974 revenue indirect cost efficiency approach to a cost effectiveness framework which helps to assess the ability of a firm to achieve the current revenue expressed in the firm s own prices and quantities at minimum cost the degree of cost effectiveness is quantified as the ratio of the minimum cost to the observed cost of the evaluated firm where the minimum cost is computed by simultaneously adjusting the output levels at the current revenue in this paper we develop two cost effectiveness approaches based on convex data envelopment analysis and nonconvex free disposable hull technologies the objectives of this paper are threefold firstly we develop a convex cost effectiveness cce measure which is equivalent to the camanho dyson cce measure under the constant returns to scale assumption secondly we introduce three nonconvex cost effectiveness ncce measures which are shown to be equivalent with respect to each returns to scale nonconvex technology finally we apply our framework to a real data

the law of one price in data envelopment analysis restricting weight flexibility across firms abstract the law of one price loop states that all firms face the same prices for their inputs and outputs under market equilibrium taken here as a normative condition for efficiency prices this law has powerful implications for productive efficiency analysis which have remained unexploited thus far this paper shows how loop based weight restrictions can be incorporated in data envelopment analysis dea utilizing the relation between industry level and firm level cost efficiency measures we propose to apply a set of input prices that is common for all firms and that maximizes the cost efficiency of the industry our framework allows for firm specific output weights and for variable returns to scale and preserves the linear programming structure of the standard dea we apply the proposed methodology to the evaluation of the research efficiency of economics departments of dutch universities this application shows that the methodology is computationally tractable for practical efficiency analysis and that it helps in deepening the dea analysis

measuring economic efficiency with incomplete price information abstract this note identifies and corrects a technical error in t kuosmanen g t post eur j oper res 134 2001 43 58

strategic monetary policy in interdependent economies gains from coordination reconsidered abstract there is a wide acceptance that gains to international monetary policy coordination are small at best and that the need of policy coordination is questionable this conclusion however follows from the underlying presumption that monetary policy is concerned with the stabilization of macroeconomic fluctuations only this paper presents a general short run monetary policy analysis within a familiar two country new open economy macroeconomics noem framework where national monetary policy involves the choice of a deterministic growth trend of money supply average inflation rate and stochastic state dependent deviations of actual money supply from the deterministic trend stabilization strategic beggar thy neighbor considerations induce the deviation of both policy choices from their socially optimal values the gains from international coordination of the average inflation rate are of first order and hence larger than the gains from the coordination of the stabilization policies which are of second order

estimating output gains by means of luenberger efficiency measures abstract in this paper we propose a new measure of input allocative efficiency that we estimate using directional distance functions our new measure compares the gain in output if a firm reduces technical inefficiency for the direct production possibility set and the gain in output if the firm reduces technical inefficiency for the indirect production possibility set because the directional distance function uses a translated origin the gain in output from an optimal reallocation of inputs can be estimated for non radial expansions in output we estimate efficiency for japanese banks during 1992 1999 the gains in outputs from reducing allocative inefficiency by reallocating inputs are greater than the gains in outputs that can be attained by reducing technical inefficiency

quantitative modelling of the eur chf exchange rate during the target zone regime of september 2011 to january 2015 krugman 1991 s target zone model for exchange rate dynamics has become the reference of a large part of this literature despite its simplicity and elegance empirical evidence has been lacking not least because it is difficult to capture the predicted non linear relationship between the observable exchange rate and the non observable fundamental value this is why we propose a different approach by inverting locally the relation between exchange rate and fundamental value we derive analytical expressions for the conditional volatility and the probability density as a function of the exchange rate this allows us to examine krugman s prediction directly from historical data and furthermore enables us to test the smooth pasting condition which is intimately related to the no arbitrage condition concretely we study the performance of the euro swiss franc exchange rate in the extraordinary period from september 6 2011 to january 15 2015 when the swiss national bank enforced a minimum exchange rate of 1 20 swiss francs per euro we show that the data are well explained by the theory and conclude that krugman s target zone model holds after all but apparently only under extreme and sustained pressure that pushes continuously the exchange rate very close to the boundary of the target zone

the gains from fiscal cooperation in the two commodity real trade model abstract this paper analyzes the gains from fiscal cooperation within the context of the standard two commodity real trade model it shows how the adjustment in the terms of trade is the critical factor in determining the effects of moving from a noncooperative equilibrium in general a noncooperative equilibrium leads to an overexpansion of government expenditure on the import good relative to a cooperative equilibrium the specific example of a logarithmic economy is also considered the paper discusses further the welfare effects resulting from the formation of a coalition of two countries among three

monetary policy interactions under managed exchange rates this paper studies a two country monetary system where one country sets its money stock but gives up control of the exchange rate and the other country gives up control of its own money stock but can set the exchange rate independently cournot nash equilibria under managed rates differ significantly from those under fixed or floating rates the country that controls the exchange rate can effectively offset inflationary shocks by changing the exchange rate at the expense of the foreign country and as a result can be better off than the foreign country this result provides an example of a successful disinflation through an exchange rate appreciation in a two country world and it indicates that managed exchange rate regimes tend to be unstable since both countries find it desirable to affect the exchange rate managed exchange rates however are a stable outcome when the center country is so much larger than its partner that changes in the real exchange rate do not affect its output and real income copyright 1989 by the london school of economics and political science

on the imperfect substitutability of policy regimes exchange rate targetting vs policy coordination abstract exchange rate targetting is always an imperfect substitute for explicit policy coordination but succeeds when economies are either structurally dissimilar with symmetric shocks or structurally symmetric with dissimilar shocks a joint commitment then generates economies of scale in interventions

optimal monetary policies and policy interdependence in the world economy the literature on strategic policy interactions has focused on the implications of alternative strategic policy interactions cooperative versus noncooperative for equilibrium macroeconomic policies given the state of the world economy this paper asks how changes in world economic conditions alter equilibrium policies given the nature of policy interdependence among nations the paper considers a world economy comprised of two countries operating under a system of flexible exchange rates both governments act noncooperatively and choose the rate of growth of their money supply so as to maximize the utility of their country s residents given the rate of growth of the other country s money supply the resulting nash equilibrium rates of growth of the home and foreign money supplies are determined and the dependence of international differences in money growth and inflation rates on international differences in technology jel e52 e60 f41 f42 the international transmission of monetary and fiscal policies has been studied a great deal by economists however policy interdependence how one country s policies depend on the policies enacted by other countries has only recently begun to be explored hamada s 1976 paper was one of the first major contributions in this regard hamada considered a world economy comprised of n countries operating under a fixed exchange rate system in which policymakers set domestic credit growth so as to maximize an objective function depending on inflation and the rate of accumulation of international reserves using this framework hamada demonstrated that in equilibrium optimal domestic credit policies are generally not pareto efficient when they are chosen noncooperatively but are pareto efficient when they are set cooperatively in subsequent work hamada 1979 1985 has elaborated on this and various other aspects of cooperative and noncooperative monetary policies under both fixed and flexible exchange rates many others have followed hamada s lead by comparing the properties of cooperative and noncooperative monetary policies eichengreen 1985 for instance considers discount rates as the instrument of monetary policy and examines issues of leadership and cooperation during the interwar years under the gold standard oudiz and sachs 1985 have used simulation methods to

externalities trade and dynamics with expanding global trade countries around the world are becoming increasingly interdependent the necessity for the governments to devise economic policies strategically with respect to the world is therefore becoming more important however at the same time there are various sectors of economies that are competitive and thus not strategic since they are in a competitive environment agents in these sectors do not perceive the influence of their decisions on the world economy and act nonstrategically of course government policies affect all sectors hence economies are mixed having both strategic and nonstrategic components it is worthwhile to point out some examples of this type of mixed economy in western capitalist countries interest rates and exchange rates are determined in a competitive market while monetary and fiscal policies an integral part of the determination of these rates are controlled by governments the government decides on the amount of aggregate resources to be allocated for education and research and development research is often carried out by individuals or firms and there is a competitive market for the products generated by it another example can be found in the fishing industry government policies dictate the maximum amount of fish that can be extracted from the ocean while there is a conmpetitive market in fish along with the dual nature of decision making the above examples have another feature in common there are externalities between the policy makers decisions these externalities imply that there are interdependences among the countries so that the decisions of each of the countries have effects on the outcome of the competitive market the competitive outcome in turn affects the decisions of the policy makers in the various countries in the example of the monetary sector money supply in one country affects the rate of interest in the domestic country as well as abroad to properly

conservative central bankers in a two country world abstract in a closed economy framework rogoff has developed the argument that it can be beneficial for society to appoint a conservative central banker we extend this analysis to a two country world in order to take into account the game between the monetary authorities of the two countries we show that conservative central bankers may now deteriorate the situations of both countries and that the distinction between symmetric and asymmetric shocks becomes crucial while symmetric shocks weaken the case for conservative central bankers asymmetric shocks strengthen it the paper also considers the case where central bankers are nominated noncooperatively by the countries

alternative time patterns of decisions and dynamic strategic interactions this paper offers a simple approach to study steady state markov perfect equilibria arising in dynamic games when players are obliged to commit their actions for several periods it highlights the importance of spillovers and dynamic strategic interactions when assessing the various time patterns conceivable in such games the obtained results are then applied to various either micro or macroeconomic issues where time patterns of decisions matter

the welfare case for the european monetary system abstract this paper argues that the european monetary system can be interpreted as a cooperative game yielding benefits to its members a simple model is set up in which it is shown that the ems solution is superior to nash if the menber countries differ this superiority to nash may require an occasional realignment it will also then require that there be no sterilization of foreign exchange interventions since otherwise the system would collpase the ems is interpreted in this paper as an arrangement manner and not o bretton woods type of arrangement when there is a leader follower relationship inside

international investment location decisions abstract in international location tournaments governments compete for foreign investment with tax and other short run incentives such tournaments can be won if agglomeration economies are sufficiently powerful to overcome investors desire to spread investments as a hedge against risk we focus on manufacturing investments by u s multinationals in the 1980s our econometric results suggest that agglomeration economies are indeed the dominant influence on investor calculations paradoxically short run incentives have limited apparent impact on location choice we conclude that high cost tournament play is unnecessary for countries with good infrastructure development specialized input suppliers and an expanding domestic market

the us and the european montary system ems a stylised asymmetrical two country model numerical simulation methods were used to explore the consequences of asymmetrical behaviour in a two countary model the asymmetries are located in the asset and goods demand functions and in the parameters governing fosreign exchange market intervention in a stylized fashion these asymmetries reflect differences that might be characteriestic of differences between the usa and the european countries the ems the model is in continuous time with an overlapping wage contact set up underlying the domestic inflation process good demand functions which incorporate dependence on wealth and rational expectations shocks to the model reveal the effect of the asymmetries when compared to a fully symmetrical bases case