Open‐Economy Macroeconomics: Developments in Theory and Policy

Maurice Obstfeld

Scandinavian Journal of Economics, 1998, vol. 100, issue 1, 247-275

Abstract: This paper views developments in open‐economy macroeconomics through the lens of the debate over European monetary unification. The empirical tendency for nominal exchange rate regimes to affect the variability of nominal and real exchange rates alike can be rationalized by sticky‐price theories or models of asset‐market liquidity effects. But plausible liquidity models have difficulty generating enough persistence to match the data. Thus, the macroeconomic stabilization costs of forgoing the exchange‐rate realignment option seem pertinent. It is argued that our theories of efficiencies due to a common currency remain unsatisfactory, despite recent advances. The paper concludes by reviewing theories of currency crisis

Date: 1998
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https://doi.org/10.1111/1467-9442.00101

Related works:
Working Paper: Open-Economy Macroeconomics, Developments in Theory and Policy (1999)
Working Paper: Open-economy Macroeconomics: Developments In Theory And Policy (1997)
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