Economics 554, Spring 2007

Princeton University

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Courses 2006-2007: 504 522 554 | Blackboard | Calendars | Students | Graduate Program

International Monetary Theory and Policy

This is a second-year one-semester graduate course in the Spring 2007 Graduate Program, Department of Economics, Princeton University.

The course is taught by Lars Svensson.

Announcements regarding the course will be made on this page, and the page will be frequently updated. (Course plan and readings are preliminary and will be updated until the end of classes.) Students are required to check the page regularly.

The final exam will be on Friday, May 25, 1-3pm, B-06 Fisher.

The lecture on Thursday, April 26, is cancelled. Instead, there will be a class on Saturday, April 28, 9am-12noon, in B06, Fisher Hall.

To accommodate the Macro/International Student Workshop, the time of the class will from March 29 be 1:230-4:30pm.

Teacher: Lars Svensson, Office: 106 Fisher Hall, Tel: 258-0329, Email: svensson@princeton.edu. 
Office hours: By appointment. 
Administrative assistant: Kathleen Hurley, Office: 107 Fisher Hall, Tel: 258 4023, Email:  kahurley@princeton.edu.

Class schedule: Thursday, 1:30-4:30 pm, B-06 Fisher. 
The course starts Feb 8 and ends May 3.
There is no class on Mar 22 (spring recess).

Final exam for 554: Friday, May 25, 1-3pm, B-06 Fisher.

Topics (preliminary)

1. Purchasing power parity and the law of one price
2. Intertemporal trade and the current account
3. The US current account and the dollar
4. Currency crises and international financial crises
5. Sticky-prices and monetary policy in open economies
6. The zero bound, liquidity traps, and deflation in open economies
7. International financial markets
8. The choice of monetary-policy/exchange-rate regime

Slides: Copies of slides or notes will be available before each class on this page, as pdf files. Students are expected to download and print these before each class.

Notice: These slides are not self-contained but incomplete. They are not a substitute for coming to class. In particular, the slides are simplified and sometimes provocative. They should therefore not be interpreted as definitive statements. The slides should never be quoted without my permission.

Lecture notes 1
Lecture notes 2
Lecture notes 3
Lecture notes 4
Figures from Obstfeld-Rogoff "The unsustainable..."
Lecture notes 5
Figure for revaluation effect in Blanchard-Giavazzi-Sa (p. 22, Lecture notes 5)
Lecture notes 6
Lecture notes 7
Lecture notes 8
Lecture notes 9
Lecture notes 10
Foreign Currency Debt Graphs
Lecture notes 11
Lecture notes 12
Lecture notes 13
Lecture notes 14
Lecture notes 15

Readings and course plan (preliminary) 

* indicates required reading. Other readings are suggested but not required.

This is a necessary reference for the course::
Obstfeld, Maurice, and Kenneth Rogoff (1996), Foundations of International Macroeconomics,  MIT Press.
These are useful references:
Mark, Nelson (2001), International Macroeconomics and Finance: Theory and Empirical Methods, Blackwell.
Sarno, Lucio, and Mark Taylor (2003), The Economics of Exchange Rates, Cambridge University Press.

Students are expected to find most of the readings on the web. Use links to authors' personal homepages (this usually gives you the most recent copy), central bank's publications and working papers, NBER working papers, CEPR discussion papers, journals, JSTOR, the PU Library e-journals, etc. Some restricted material is available here.  

1. Purchasing power parity and the law of one price

2. Intertemporal trade and the current account

3. The US current account and the dollar

*Bernanke (2005).
*Blanchard, Giavazzi, and Sa (2005).
Branson and Henderson (1985).
*Caballero, Farhi, Gourinchas (2006).
Dooley and Garber (2005).
Edwards (2005).
*Geithner , Timothy (2006).
Gourinchas and Rey (2005a,b).
Henderson and Rogoff (1982).
Kouri (1976, 1983).
Krugman, Paul (1991).
Lane and Milesi-Ferretti (2004).
*Obstfeld (2004).
Obstfeld (2004b).
Obstfeld and Rogoff (2000b).
*Obstfeld and Rogoff (2005a,b).
*Roubini (2006).
Roubini and Setser (2004).
Tille (2004).
Ventura (2003).

4. Currency crises and international financial crises

First-generation models:
Burnside, Eichenbaum, and Rebelo (2001)
Flood and Garber (1984)
Flood and Jeanne (2005)
Krugman (1979)
Lahiri and Végh (2003)
Obstfeld (1986)
Obstfeld and Rogoff (1996, section 8.6).
*Végh (2003, chapt. 14 [chapt. 9, Balance of payment crises])

Escape clause models ("second generation")
Buiter, Corsetti, and Pesenti (1998)
Drazen (2003)
*Jeanne (1997) (The model)
Jeanne (2000)
Jeanne (2000)
Krugman (1996)
*Obstfeld (1996)
Loisel (2001)

Balance sheet models ("third generation")
*Aghion, Bacchetta, and Banerjee (2001)
Arellano and Mendoza (2002)
Caballero and Krishnamurthy (2001)
Cavallo, Kisselev, Perri, and Roubini (2005)
Céspedes, Chang, and Velasco (2004)
Chang and Velasco (2001a)
Chang and Velasco (2001b)
Frankel, Jeffrey (2005)
Krugman, Paul (1999)
Schneider and Tornell (2004)

Endogenizing balance sheet fragilities
Allen and Gale (2000)
*Burnside, Eichenbaum, and Rebelo (2004)
Gale and Vives (2002)
Ize and Yeyati (2003)
Jeanne (2005)
*Tirole (2003)
Tirole (2002)
Vives (2002)

5. Sticky-prices and monetary policy in open economies

Adolfson, Laséen, Lindé, and Villani (2006)
Ball (1999)
Batini and Haldane (1999)
*Benigno and Benigno (2004)
Chari, Kehoe and McGrattan (2000)
*Clarida, Gali and Gertler (2002)
*Corsetti and Pesenti (2005a)
*Corsetti and Pesenti (2005b
Devereux and Engel (2002)
Dornbusch (1980)
Engel (2002)
Friberg (1998)
Gali and Monacelli (2002)
Kollman (2001)  
Krugman (2001)
*Lane (2001)
McCallum and Nelson (1999, 2000)
Monacelli (2005)
*Nelson (2002)
*Obstfeld and Rogoff (1996, sec. 9.2, 10.1, 10.2)
Obstfeld and Rogoff (2000)
Obstfeld and Rogoff (2002) 
Schmitt-Grohe, Stephanie, and Martin Uribe (2001)
Smets and Wouters (2001) 
Sutherland (2000)
Svensson (2000b)
Svensson and van Wijnbergen (1989)

6. The zero bound, liquidity traps and deflation in open economies

Ahearne, et al. (2002)
Auerbach and Obstfeld (2003)
Benhabib, Schmitt-Grohe and Uribe (2002)
Bernanke (2000)
*Bernanke (2002)
Bernanke (2003)
Buiter and Panigirtzoglou (1999)
Clouse, Henderson, Orphanides, Small and Tinsley (2000) 
Coenen, Günter, and Volker Wieland (2003, revised)
Eggertsson (2003)
Eggertsson and Woodford (2003)
*Financial Times (2006)
Goodfriend (2000)
Ito and Mishkin (2004)
*Jeanne and Svensson (2007)
Krugman (1998) 
McCallum (2002)
McCallum (2005)
McKinnon, Ronald, and Gunther Schnabl (2002)
Meltzer (1999)
Orphanides and Wieland (1999)
Posen (1998)
Reifschneider and Williams (2000) 
Svensson (2001b, Appendix 1)
*Svensson (2003a)
Svensson (2004) 
Ueda (2000)
Woodford (2003, chap. 2, sec. 4.2)

7. International financial markets

*Backus, Kehoe, and Kydland (1992)
*Cole and Obstfeld (1991)
Lewis (1999)
Obstfeld (1994)
*Obstfeld and Rogoff (1996, chapt. 5)
*Obstfeld and Rogoff (2000b)
Svensson (1988)
van Wincoop (1999)

8. The choice of monetary-policy/exchange-rate regime

Calvo and Reinhart (2000)
Cavallo, Kisselev, Perri and Roubini (2002)
Céspedes, Chang and Velasco (2002) 
Fischer (2001)
Frankel (1999)
IMF (2005, WEO Chapt. IV)
Mishkin and Savastano (1999)
Obstfeld and Rogoff (1995)
Reinhart and Rogoff (2002)
Svensson (1997a)

 References 

Adolfson, Malin, Stefan Laséen, Jesper Lindé, and Mattias Villani (2006), "Evaluating an Estimated New Keynesian Small Open Economy Model," working paper, www.riksbank.se.
*Aghion, Philippe, Philippe Bacchetta, and Abhijit Banerjee (2001), "Currency Crises and Monetary Policy in an Economy with Credit Constraints," European Economic Review 45, 1121-1150.
Ahearne, Alan, Joseph Gagnon, Jane Haltmaier, Steve Kamin, Christopher Erceg, Jon Faust, Luca Guerrieri, Carter Hemphill, Linda Kole, Jennifer Roush, John Rogers, Nathan Sheets and Jonathan Wright (2002), “Preventing Deflation: Lessons from Japan’s Experience in the 1990s,” International Finance Discussion Paper No. 729, Federal Reserve Board.
Allen, Franklin, and Douglas Gale (2000), "Optimal Currency Crises", Carnegie Rochester Conference Series on Public Policy 53, 177-230.
Angeletos, George-Marios, and Iván Werning (2005), "Crises and Prices: Information Aggregation, Multiplicity and Volatility", mimeo, MIT.
Angeloni, Ignazio, Vitor Gaspar and Oreste Tristani (1999), "The Monetary Policy Strategy of the ECB," working paper, ECB.
Arellano, Christina, and Enrique Mendoza (2002), "Credit Frictions and ‘Sudden Stops’ in Small Open Economies: An Equilibrium Business Cycle Framework for Emerging Markets Crises", NBER Working Paper No.8880.
Auerbach, Alan J., and Maurice Obstfeld (2003), "The Case for Open-Market Purchases in a Liquidity Trap," working paper, University of California, Berkeley. Comments by Lars Svensson.
Bacchetta, Philippe, and Eric van Wincoop (2002), "A Theory of Currency Denomination of International Trade," Journal of International Economics, forthcoming.
Backus D. P. Kehoe and F. Kydland (1992), “International Real Business Cycles”, Journal of Political Economy 100, 745-775.
Ball, Larry (1999), "Policy Rules for Open Economies," in Taylor (1999).
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Batini, Nicoletta, and Andrew Haldane (1999), "Forward-Looking Rules for Monetary Policy," in Taylor (1999)
Begg, David, Paul De Grauwe, Francesco Giavazzi, Harald Uhlig, and Charles Wyplosz (1998), The ECB: Safe at any Speed?, Monitoring the European Central Bank 1, CEPR, London.
Benhabib, Jess, Stephanie Schmitt-Grohe and Martin Uribe (2002), "Avoiding Liquidity Traps," Journal of Political Economy 110, 535-563.
Benigno, Pierpaolo (1999), "Optimal Monetary Policy in a Currency Area," working paper, Princeton University.
Benigno, Gianluca, and Pierpaolo Benigno (2004), "Designating Targeting Rules for International Monetary Policy Cooperation," working paper.
Berg, Claes, and Lars Jonung (1999), "Pioneering Price Level Targeting: The Swedish Experience 1931-1937," Journal of Monetary Economics 43, 525-551.
Bergin, Paul and Steven Sheffrin (2000), “Interest Rates, Exchange Rates and Present Value Models of the Current Account,” Economic Journal 110, 535-558.
Bernanke, Ben S. (2000), "Japanese Monetary Policy: A Case of Self-Induced Paralysis?" in Adam Posen and Ryoichi Mikitani, eds., Japan's Financial Crisis and Its Parallels to US Experience, Special Report 13, Institute for International Economics, Washington, DC, 149-166. .
Bernanke, Ben S. (2002), "Deflation: Making Sure `It' Doesn't Happen Here," speech on November 21, Federal Reserve Board.
Bernanke, Ben S. (2003), "Some Thoughts on Monetary Policy in Japan," speech on May 31, Federal Reserve Board.
Bernanke, Ben S. (2004), "The Logic of Monetary Policy," speech in Washington, DC, December 2, Federal Reserve Board.
Bernanke, Ben S. (2005), "The Global Saving Glut and the U.S. Current Account," speech in Richmond, VA, on March 10, Federal Reserve Board
Bernanke, Ben S., and Mark Gertler (1999), "Monetary Policy and Asset Price Volatility," in New Challenges for Monetary Policy: A Symposium Sponsored by the Federal Reserve Bank of Kansas City, Federal Reserve Bank of Kansas City.
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Bernanke, Ben S., Thomas Laubach, Frederic Mishkin and Adam Posen (1999), Inflation Targeting: Lessons from the International Experience, Princeton: Princeton Univ. Press. 
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Bernanke, Ben S., and Frederic S. Mishkin (1997), "Inflation Targeting: A New Framework for Monetary Policy?" Journal of Economic Perspectives 11, 97-116.
Bernanke, Ben S., and Michael Woodford, eds. (2005), The Inflation-Targeting Debate, University of Chicago Press.
Blanchard, Olivier, Francesco Giavazzi, and Filipa Sa (2005), "International Investors, the U.S. Current Account and the Dollar," Brookings Papers on Economic Activity 1: 2005, 1-49.
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Buiter, Willem H. (1999), "Alice in Euroland," CEPR Policy Paper No. 1.
Buiter, Willem H., Corsetti, Giancarlo and Paolo Pesenti (1998), Financial Markets and European Monetary Cooperation: The Lessons of the 1992-93 Exchange Rate Mechanism Crisis, Cambridge University Press.
Buiter, Willem H., and Nikolas Panigirtzoglou (1999), "Liquidity Traps: How to Avoid Them and How to Escape Them," NBER Working Paper No. 7245.
Burnside, Craig, Martin Eichenbaum, and Sergio Rebelo (2001), "Prospective Deficits and the Asian Currency Crisis", Journal of Political Economy 109, 1155-1197.
Burnside, Craig, Martin Eichenbaum, and Sergio Rebelo (2004), "Government Guarantees and Self-fulfilling Speculative Attacks", Journal of Economic Theory 119, 31-63.
Burstein, Ariel, Martin Eichenbaum, and Sergio Rebelo (2005), "Large Devaluations and the Real Exchange Rate," Journal of Political Economy August 2005.
Caballero, Ricardo, and Arvind Krishnamurthy (2001), "International and Domestic Collateral Constraints in a Model of Emerging Market Crises," Journal of Monetary Economics.
Caballero, Ricardo J., Emmanuel Farhi, and Pierre-Olivier Gourinchas (2006), "An Equilibrium Model of 'Global Imbalances ' and Low Interest Rates," NBER Working Paper No. 11996.
Calmfors, Lars, Giancarlo Corsetti, John Flemming, Seppo Honkapohja, John Kay, Willi Leibfritz, Gilles Saint-Paul, Hans-Werner Sinn and Xavier Vives (2003), Report on the European Economy 2003, European Economic Advisory Group at CESifo. 
Calvo, Guillermo A., and Carmen M. Reinhart (2000), "Fear of floating," NBER Working Paper No. 7993. 
Canzoneri, Matthew B., Robert E. Cumby and Behzad T. Diba (2002), "The Need for International Policy Coordination: What's Old, What's New, What's Yet to Come?" NBER Working Paper No. 8765.
Cavallo, Michele, Kate Kisselev, Fabrizio Perri, and Nouriel Roubini (2005), "Exchange Rate Overshooting and the Costs of Floating," working paper, Federal Reserve Bank of San Francisco.
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Cecchetti, Stephen G., Hans Genberg and Sushil Wadhwani (2002), "Asset Prices in a Flexible Inflation Targeting Framework," working paper.
Cecchetti, Stephen G., and Junhan Kim (2003), "Inflation Targeting, Price Level Targeting, and Output Variability," paper presented to the NBER Conference on Inflation Targeting, January 2003.
Céspedes, Luis, Roberto Chang, and Andrés Velasco (2004), "Balance Sheets and Exchange Rate Policy," American Economic Review 94(4), 1183-1193.
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Chang, Roberto, and Andrés Velasco (2001b), "Monetary Policy in a Dollarized Economy Where Balance Sheets Matter", Journal of Development Economics 812.
Chari, V.V., Patrick J. Kehoe and Ellen McGrattan (2000), "Can Sticky Price Models Generate Volatile and Persistent Exchange Rates?", NBER Working Paper No. 7869.
Clarida, Richard, ed., (2005), G7 Current Account Imbalances: Sustainability and Adjustment, University of Chicago Press, forthcoming.  
Clarida, Richard, Jordi Gali, and Mark Gertler (1999), "The Science of Monetary Policy: A New Keynesian Perspective," Journal of Economic Literature 37, 1661-1707.  
Clarida, Richard, Jordi Gali, and Mark Gertler (2001), "Optimal Monetary Policy in Open vs. Closed Economies," American Economic Review (May 2001).  
Clarida, Richard, Jordi Gali, and Mark Gertler (2002), "A Simple Framework for International Monetary Policy Analysis," Journal of Monetary Economics 49, 879-904.  
Clouse, James, Dale Henderson, Athanasios Orphanides, David Small and Peter Tinsley (2000), "Monetary Policy when the Nominal Short-Term Interest Rate is Zero,"  Journal of Money, Credit, and Banking 32 (November 2000, Part 2). (FEDS Working Paper No. 2000-51, Federal Reserve Board)
Coenen, Günter, and Volker Wieland (2003, revised), "The zero-interest-rate bound and the role of the exchange rate for monetary policy in Japan,"  Journal of Monetary Economics 50(5).   
Cole, Harold L, and Maurice Obsrfeld (1991), "Commodity Trade and International Risk Sharing: How Much Do Financial Markets Matter?" Journal of Monetary Economics 28, 3-24.
Corsetti, Giancarlo, and Paolo Pesenti (2005a), "International Dimensions of Optimal Monetary Policy," Journal of Monetary Economics 52, 281-305.
Corsetti, Giancarlo, and Paolo Pesenti (2005b), "The Simple Geometry of Transmission and Stabilization in Closed and Open Economy," CEPR Discussion Paper No. 5080.  
Crooks, Ed, and Tony Major (2003), "Dissent inside the Eurotower," Financial Times, March 5, 2003.
Crucini, Mario J., and Mototsugu Shintani (2006), “Persistence in Law-of-One-Price Deviations: Evidence from Micro-data,” working paper, Vanderbilt University.
Crucini, Mario J., Chris I. Telmer, and Marios Zachariadis (2005), “Understanding European Real Exchange Rates," American Economic Review 95, 724-738.
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Dooley, Michael, and Peter Garber (2005), "Is it 1958 or 1968? Three Notes on the Longevity of the Revived Bretton Woods System," working paper. 
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Drazen, Allan, 2003, "Interest Rate Defense Against Speculative Attack as a Signal: A Primer," in M. Dooley and J. Frankel (eds.), Managing Currency Crises in Emerging Markets, University of Chicago Press.
Edwards, Sebastian (2005), "Is The U.S. Current Account Deficit Sustainable? And If Not, How Costly Is Adjusment Likely To Be?" working paper.
Eggertsson, Gauti B. (2003), "How to Fight Deflation in a Liquidity Trap: Committing to being Irresponsible," working paper.
Eggertsson, Gauti B., and Michael Woodford (2003), “The Zero Bound on Interest Rates and Optimal Monetary Policy,” Brookings Papers on Economic Activity 2003:1, 139-211.
Eichengreen, Barry, and Ricardo Hausmann (eds.) (2005), Other People's Money: Debt Denomination and Financial Instability in Emerging Market Economies, University of Chicago Press.
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Engel, Charles (2002), "Expenditure Switching and Exchange Rate Policy," working paper.
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Gourinchas, Pierre-Olivier, and Helene Rey (2005b), "International Financial Adjustment,"  working paper, February.
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Jeanne, Olivier (2000), "Currency Crises: A Perspective on Recent Theoretical Developments," Special Papers in International Economics No.20 (March), International Finance Section, Dept of Economics, Princeton University.
Jeanne, Olivier (2005), "Why Do Emerging Economies Borrow in Foreign Currency?", in Barry Eichengreen and Ricardo Hausmann eds, Other People’s Money, The University of Chicago Press, 190-217 (also IMF Working Paper ).
Jeanne, Olivier, and Paul Masson (2000), "Currency Crises, Sunspots and Markov-switching Regimes", Journal of International Economics 50, 327-350.
Jeanne, Olivier, and Lars E.O. Svensson (2007), "Credible Commitment to Optimal Escape from a Liquidity Trap: The Role of the Balance Sheet of an Independent Central Bank," American Economic Review 97 (2007) 474-490.
Kilian, Lutz, and Tao Zha (2002), "Quantifying the Uncertainty about the Half-Life of Deviations from PPP," Journal of Applied Econometrics 17, 107-125.
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Krugman, Paul (1979), "A Model of Balance of Payments Crises," Journal of Money, Credit, and Banking 11, 311-25.
Krugman, Paul (1991), "Has the Adjustment Process Worked?" Policy Analyses in International Economics 34, Institute for International Economics.
Krugman, Paul, 1996, "Are Currency Crises Self-fulfilling?", NBER Macroeconomics Annual, MIT Press, Cambridge MA.
Krugman, Paul (1998), "It’s Baaack: Japan’s Slump and the Return of the Liquidity Trap," Brookings Papers on Economic Activity 1998(2), 137-205.
Krugman, Paul (1999), "Balance Sheet Effects, the Transfer Problem and Financial Crises," in International Finance and Financial Crises: Essays in Honour of Robert P. Flood, Jr., ed. by P. Isard, A. Razin and A.K. Rose (New York: Kluwer Academic Publishers), 31-44.
Krugman, Paul (2001), "The Mundell-Fleming Model," Lecture notes 9/18/01.
Lahiri, Amartya, and Carlos Végh (2003), "Delaying the Inevitable: Interest Rate Defense and Balance of Payments Crises", Journal of Political Economy 111, 404-24.
Lane, Philip R. (2001), "The New Open Economy Macroeconomics: A Survey," Journal of International Economics 54, 235-266.
Lane, P., and Milesi-Ferretti, G. (2004), "Financial globalization and exchange rates," NBER Macroeconomics Annual, 73-115.
Lewis, Karen (1999), "Trying to Explain Home Bias in Equities and Consumption," Journal of Economic Literature 37, 571-608.
Loisel, Olivier, and Philippe Martin, 2001, "Coordination, Cooperation, Contagion and Currency Crises", Journal of International Economics 53, 399-419.
McCallum, Bennett T. (1999a), "Issues in the Design of Monetary Policy Rules," in Taylor, John B., and Michael Woodford, eds., Handbook of Macroeconomics, Vol. 1C, North-Holland, chap. 23. (NBER Working Paper No. 6016.)
McCallum, Bennett T. (2000), "Theoretical Analysis Regarding a Zero Lower Bound on Nominal Interest Rates," Journal of Money, Credit, and Banking 32 (November 2000, Part 2), 870-904. 
McCallum, Bennett T. (2002), "Japanese Monetary Policy 1991-2001," Federal Reserve Bank of Richmond Economic Quarterly 89, forthcoming.
McCallum, Bennett T. (2005), "A Monetary Policy Rule for Automatic Prevention of a Liquidity Trap," NBER WP No. 11056.
McCallum, Bennett T., and Edward Nelson (1999), "Nominal Income Targeting in an Open-Economy Optimizing Model, Journal of Monetary Economics 43, 553-578.
McCallum, Bennett T., and Edward Nelson (2000), "Monetary Policy for an Open Economy: An Alternative Framework with Optimizing Agents and Sticky Prices," Oxford Review of Economic Policy 16 (Winter 2000), 74-91.
McKinnon, Ronald, and Gunther Schnabl (2002), "Synchronized Business Cycles in East Asia and Fluctuations in the Yen/Dollar Exchange Rate," working paper, Stanford University. 
Meltzer, Allan H. (1999), "A Policy for Japanese Recovery," working paper.
Meltzer, Allan H. (n.d.), "Money," draft encyclopedia entry.
Mercereau, Benoit (2003), “The Role of Stock Markets in Current Account Dynamics: a Time Series Approach”, BE Press, Topics in Macroeconomics 3(1).
Mishkin, Frederic S. (1995), "Symposium on the Monetary Transmission Mechanism," Journal of Economic Perspectives 9(4), 3-10. 
Mishkin, Frederic S. (2000), The Economics of Money, Banking and Financial Markets, 6th edition, Addison-Wesley Publishing.
Mishkin, Frederic S., and Miguel A. Savastano (1999), "Monetary Policy Strategies for Latin America," working paper.
Monacelli, Tommaso (2005), "Monetary Policy in a Low Pass-Through Environment," Journal of Money Credit and Banking 37, 1047-1066.
Morris, Stephen, and Hyun Song Shin (1998), "Unique Equilibrium in a Model of Self-Fulfilling Currency Attacks", American Economic Review 88(3), 587-597.
Nelson, Eward (2002), "Comment on Clarida, Gali and Gertler (2002)." 
Nelson, Edward (2003), "The Future of Monetary Aggregates in Monetary Policy Analysis," Journal of Monetary Economics, forthcoming.
Obstfeld, Maurice (1986), "Rational and Self-fulfilling Balance-of-Payments Crises," American Economic Review 76, 72-81.
Obstfeld, Maurice (1996), "Models of Currency Crises with Self-fulfilling Features", European Economic Review 40, 1037-1047.
Obstfeld, Maurice (2004), "External Adjustment," Review of World Economics, forthcoming.
Obstfeld, Maurice (2004b), "Globalization, Macroeconomic Performance, and the Exchange Rates of Emerging Economies," Monetary and Economic Studies 22(S-1), 29-55.
Obstfeld, Maurice, and Kenneth Rogoff (1995), "The Mirage of Fixed Exchange Rates," Journal of Economic Perspectives 9(4), 73-96. 
Obstfeld, Maurice, and Kenneth Rogoff (1996), Foundations of International Macroeconomics,  MIT Press.
Obstfeld, Maurice, and Kenneth Rogoff (2000a), "New Directions for Stochastic Open Economy Models," Journal of International Economics 50, 117-153.
Obstfeld, Maurice, and Kenneth Rogoff (2000b), "The Six Major Puzzles in International Macroeconomics: Is There a Common Cause?" NBER Macroeconomics Annual 15, 339-390.
Obstfeld, Maurice, and Kenneth Rogoff (2002), "Global Implications of Self-Oriented National Monetary Rules," Quarterly Journal of Economics 117, 503-36.
Obstfeld, Maurice and Kenneth Rogoff (2005a), “Global Current Account Imbalances and Exchange Rate Adjustments,” Brookings Papers on Economics Activity 1:2005, 67-146.
Obstfeld, Maurice, and Kenneth Rogoff (2005b), "The unsustainable U.S. current account revisited," in Clarida, Richard, ed., G7 Current Account Imbalances: Sustainability and Adjustment, University of Chicago Press, forthcoming.
Orphanides, Athanasios, and Volker Wieland (1999), "Efficient Monetary Policy Design Near Price Stability," working paper, Federal Reserve Board.
Parsley, David, and Helen Popper (2006), "Accounting for Real Exchange Rate Changes with Individual Goods," working paper, Vanderbuilt University.
Posen, Adam S. (1998), Restoring Japan's Economic Growth, Institute for International Economics, Washington, DC.
Razin, Assaf, and Lars E.O. Svensson (1983), “The Terms of Trade and the Current Account: The Harberger-Laursen-Metzler Effect,” Journal of Political Economy 91, 97-125.
Reifschneider, David, and John Williams (2000), "Three Lessons for Monetary Policy in a Low Inflation Era," Journal of Money, Credit, and Banking 32 (November 2000, Part 2). (FEDS Working Paper No. 1999-44, Federal Reserve Board.)
Reinhart, Carmen M., and Kenneth S. Rogoff (2002), "The Modern History of Exchange Rate Arrangements: A Reinterpretation," NBER Working Paper No. 8963.
Rochon, Céline (2004), "Devaluation Without Common Knowledge", working paper, Thema, University of Cergy Pontoise.
Rogoff, Kenneth (1996), "The Purchasing Power Parity Puzzle", Journal of Economic Literature 34,  647-668.
Rogoff, Kenneth (2002), "Dornbusch's Overshooting Model after Twenty-Five Years," IMF Working Paper WP/02/29.
Rotemberg, Julio J., and Michael Woodford (1997), "An Optimization-Based Econometric Framework for the Evaluation of Monetary Policy," NBER Macroeconomics Annual 1997, 297-346.
Roubini, Noriel, and Brad Setser (2004), "The US as a Net Debtor: The Sustainability of the US External Balance," http://www.stern.nyu.edu/globalmacro/.
Roubini, Noriel (2006), "Orwellian Chutzpah and Doublespeak in the Economic Report of the President: the US Current Account Deficit Becomes the 'US Capital Account Surplus', blog Feb 13, 2006, http://www.rgemonitor.com/blog/roubini/.
Rudebusch, Glenn, and Lars E.O. Svensson (1999), "Policy Rules for Inflation Targeting," in John B. Taylor (ed.), Monetary Policy Rules, University of Chicago Press, 1999.  
Schmitt-Grohe, Stephanie, and Martin Uribe (2001), "Closing Small Open Economy Models," Working Paper.
Schneider, Martin, and Aaron Tornell (2004), "Balance Sheet Effects and Financial Crises", Review of Economic Studies 71, 883-913.
Smets, Frank, and Raf Wouters (2001), "Openness, Imperfect Exchange-Rate Pass-Through and Monetary Policy," Working Paper.
Söderlind, Paul (1999), "Solution and Estimation of RE Macromodels with Optimal Policy," European Economic Review 43, 813-823. 
Sutherland, Alan (2000), "Inflation Targeting in a Small Open Economy," working paper.
Svensson, Lars E.O. (1988), "Trade in Risky Assets," American Economic Review 78, 375-394.
Svensson, Lars E.O. (1993), "Term, Inflation, and Foreign Exchange Risk Premia: A Unified Treatment," NBER working paper No. 4544. 
Svensson, Lars E.O. (1997a), "Exchange rate target or inflation target for Norway?" in Anne Berit Christiansen and Jan Fredrik Qvigstad, eds., Choosing a Monetary Policy Target, Scandinavian University Press (Universitetsforlaget AS), Oslo, 120-138.
Svensson, Lars E.O. (1997b), "Inflation Forecast Targeting: Implementing and Monitoring Inflation Targets," European Economic Review 41 (1997), 1111-1146. 
Svensson, Lars E.O. (1999a), "Inflation Targeting as a Monetary Policy Rule," Journal of Monetary Economics 43, 607-654. 
Svensson, Lars E.O. (1999b), "Monetary Policy Issues for the Eurosystem," Carnegie-Rochester Conferences Series on Public Policy 51-1, 79-136.
Svensson, Lars E.O. (2000a), "The First Year of the Eurosystem: Inflation Targeting or Not?" American Economic Review: Papers and Proceedings 90, May 2000, 95-99.
Svensson, Lars E.O. (2000b), "Open-Economy Inflation Targeting," Journal of International Economics 50 (2000), 155-183. 
Svensson, Lars E.O. (2001a), "Price Stability as a Target for Monetary Policy: Defining and Maintaining Price Stability," in Deutsche Bundesbank, ed. (2001), The Monetary Transmission Process: Recent Developments and Lessons for Europe, Palgrave, New York, 60-102.
Svensson, Lars E.O. (2001b), "The Zero Bound in an Open Economy: A Foolproof Way of Escaping from a Liquidity Trap," Monetary and Economic Studies 19(S-1), February 2001, 277-312.
Svensson, Lars E.O. (2003a), "Escaping from a Liquidity Trap and Deflation: The Foolproof Way and Others,"  Journal of Economic Perspectives 17-4 (Fall 2003) 145-166.
Svensson, Lars E.O. (2003b), "What Is Wrong with Taylor Rules? Using Judgment in Monetary Policy through Targeting Rules," Journal of Economic Literature 41, 426-477.
Svensson, Lars E.O. (2003c), "In the Right Direction, But Not Enough: The Modification of the Monetary-Policy Strategy of the ECB," briefing paper to the European Parliament.
Svensson, Lars E.O. (2004), "The Magic of the Exchange Rate: Optimal Escape from a Liquidity Trap in Small and Large Open Economies," working paper.
Svensson, Lars E.O. (2007), "Optimization under Commitment and Discretion, the Recursive Saddlepoint Method, and Targeting Rules and Instrument Rules: Lecture Notes."
Svensson, Lars E.O., and Sweder van Wijnbergen (1989), "Excess Capacity, Monopolistic Competition and International Transmission of Monetary Disturbances," Economic Journal 99, 785-805.
Svensson, Lars E.O., and Michael Woodford (2003), "Indicator Variables for Optimal Policy," Journal of Monetary Economics 50, 691-720.   
Svensson, Lars E.O., and Michael Woodford (2005), "Implementing Optimal Policy through Inflation-Forecast Targeting," in Bernanke, Ben S., and Michael Woodford, eds. (2005) 19-83. 
Taylor, John B. (1993), "Discretion versus Policy Rules in Practice," Carnegie-Rochester Conference Series on Public Policy 39, 195-214.
Taylor, John B. (1999), "A Historical Analysis of Monetary Policy Rules," in Taylor, John B., ed., Monetary Policy Rules, Chicago: Univ. of Chicago Press.
Taylor, Alan M, and Mark P. Taylor (2005), “The Purchasing Power Parity Debate”, Journal of Economic Perspectives 18(4), 135-158.
Tille, Cedric (2004), "Financial Integration and the Wealth Effect of Exchange Rate Fluctuations," working paper. 
Tirole, Jean (2003), "Inefficient Foreign Borrowing: A Dual- and Common-Agency Perspective", American Economic Review 93, 1678-1702.
Tirole, Jean (2002), Financial Crises, Liquidity, and the International Monetary System, Princeton University Press.
Truman, Edwin (2003), Inflation Targeting and the International Financial System: Challenges and Opportunities, manuscript, Institute for International Economics.
Ueda, Kazuo (2000), "Why the Bank of Japan Won't Target Inflation," Wall Street Journal, March 6, 2000.
Végh, Carlos (2003), Manuscript on Open Macro in Developing Countries, www.econ.umd.edu/~vegh
Ventura, Jaume (2001), “A Portfolio View of the U.S. Current Account Deficit,” Brookings Papers on Economic Activity 2001, 241-53.
Ventura, J. (2003), "Towards a theory of current accounts," The World Economy.
Vestin, David (2003), "Price-level targeting vs inflation targeting in a forward-looking model," working paper.
Vives, Xavier (2002), "External Discipline and Financial Stability", European Economic Review 46, 821-828.
Walsh, Carl (1998), Monetary Theory and Policy,  MIT Press.
Wicksell, Knut (1898), Geldzins und Güterpreise, Jena. English translation: Interest and Prices, 1936. Reprinted 1965, Kelley, New York.
Woodford, Michael (1998), "Doing Without Money: Controlling Inflation in a Post-Monetary World," Review of Economic Dynamics 1: 173-219. (NBER Working Paper No. 6168.)
Woodford, Michael (1999), "Inflation Stabilization and Welfare," working paper. 
Woodford, Michael (2000),  "Pitfalls of Forward-Looking Monetary Policy," American Economic Review 90, 100-104.
Woodford, Michael (2001), "The Taylor Rule and Optimal Monetary Policy," American Economic Review 91, 232-237.
Woodford, Michael (2003), Interest and Prices: Foundations of a Theory of Monetary Policy, Princeton University Press. 
Woodford, Michael (2003-2), "Price-Level Determination under Interest-Rate Rules," chap. 2 of Interest and Prices: Foundations of a Theory of Monetary Policy.  
Woodford, Michael (2003-3), "Optimizing Models with Nominal Rigidities," chap. 3 of Interest and Prices: Foundations of a Theory of Monetary Policy. 
Woodford, Michael (2003-6), "Inflation Stabilization and Welfare," chap. 6 of Interest and Prices: Foundations of a Theory of Monetary Policy.

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