A dynamic general-equilibrium model with limited participation in financial markets is constructed to study the determination of nominal exchange rates in a small open economy with tradable and non-tradable goods. The qualitative and quantitative implications of this framework are assessed under flexible prices. Then, the panel dynamic OLS regression is applied to seek the empirical support for...

and real-return expectations in Canada and the United States via a twocountry extension of the equilibrium term-structure model introduced by Longstaff and Schwartz (1992). This paper is part of a larger research agenda that attempts to link empirically the structure of equilibrium termstructure models to macroeconomic fundamentals in both the United States and Canada. If they can accurately me...

This paper studies the co-movement of intra-Asian business cycles. Based on the regional bilateral trade statistics and using three de-trending techniques to examine several macroeconomic fundamentals, the negative trade effects prevailing in the cases of economic activity such as real GDP and industrial production indicate that tighter intraAsian trade may most likely lead to more idiosyncrati...

There is little if any research that explicitly models or tests the positive effects of temporary high interest rates as a signal of the resolve of a central banker to maintain or strengthen the value of the currency. Does an increase in interest rate defend the value of a currency? A (one-shot) sharp increase does. In this paper, we start with a game-theoretical model in which a monetary autho...