This paper develops a two-country general equilibrium model to analyze the optimal rate of inflation under discretion. When agents' welfare is the sole policy objective it is possible to show that openness and inflation no longer have a simple inverse relationship. Because the terms of trade are related to monopoly markups, a greater degree of openness may lead the policymaker to exploit the short-run Phillips curve more aggressively, even if it involves a smaller short-run benefit. Inflation can then be higher in a more open economy. Copyright (c) 2010 The Ohio State University.

Two new gas tariffs were introduced in 2000, with contrasting effects. One abolished a fixed standing charge, while the other, specifically targeted at low‐income consumers, introduced a preset charge, independent of fuel consumption, for eligible consumers. We analyse the effect of the abolition of the standing charge on different household groups, including the fuel poor, the current focus of government and regulatory policy. We find that while low‐income groups have benefited more than others from abolition of the standing charge, the fuel poor have gained less than average. We contrast this with the other targeted preset charge scheme.

This paper presents novel empirical evidence for the prediction from Becker's (1957) famous theory, that competition drives discrimination out of the market. We use a comprehensive business registration reform in Portugal as a quasi-natural experiment to study the e¤ect of increased product market competition on gender discrimination. We use employeremployee data for the universe of private sector …rms and workers, and exploit the staggered implementation of the reform across municipalities for identi…cation. Increased competition following the reform increases growth of the female employment share and reduces the gender pay gap for middle-managers and for medium-and high-skilled workers but not for top-managers or the unskilled. We also …nd that discriminatory employers, approximated by a low female employment share, are more likely to exit and those that survive reduce overall employment growth following the reform, while non-discriminatory employers grow faster. Existing evidence has shown that gender discrimination reduces output; our …ndings suggest that entry deregulation can contribute to reduce ine¢ ciencies arising from gender discrimination.

This paper studies the response of the nominal exchange rate to monetary shocks in an economy with consumption home bias (CHB) and sticky wages. The importance of accounting for the exchange rate with CHB are twofold. CHB is a consequence of the small open economy assumption when outputs are specialized and fluctuations in the relative price of traded goods generate deviations from purchasing power parity without violating the law of one price. The CHB mechanism allows monetary shocks to generate exchange rate dynamics. However, output is more sensitive to the parameter that governs expenditure switching when there is CHB. Limiting the output response to monetary shocks, whilst still generating exchange rate dynamics, places a stronger emphasis on expenditure shifting, compared to the situation in which deviations from purchasing power parity arise from failures in the law of one price.

This paper studies two often cited benefits of international monetary cooperation -lower inflation and increased international trade. I embed a model of endogenous export participation due to per period export costs within a standard monetary model of the business cycle. Endogenous export participation has two implications: policy competition between countries is more aggressive and the welfare gain from cooperation is magnified. Because high inflation also acts to raise firm export costs monetary cooperation offers an alternative explanation for rising numbers of exported products.JEL Classification: E31, E52, F41