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An emerging consensus on the future of macroeconomics views the incorporation of a role for financial intermediation, labor market frictions, and household heterogeneity in the presence of uninsurable unemployment risk as key needed extensions to the benchmark macro framework. I argue that this is welcome, but not sufficient for macro--and international macro--to tackle the menu of issues that have been facing policymakers since the recent global crisis. For this purpose, macro needs more micro than the benchmark setup has been incorporating so far. Specifically, artificial separations between business cycle analysis, the study of stabilization policies, and growth macro, as well as between international macroeconomics and international trade, must be overcome. I review selected literature contributions that took steps in this direction; outline a number of important, promising directions for future research; and discuss methodological issues in the development of this agenda.

Zonder onderwerpscode: economie

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We compare the performance of a currency board, inflation targeting, and dollarization in a small, open developing economy with a liberalized capital account. We focus on the transmission of shocks to currency and country risk premia and on the role of fluctuations in premia in the propagation of other shocks. We calibrate our model on Argentina. The framework matches the second moments of key variables well. Welfare analysis suggests that dollarization is preferable to alternative regimes because it removes currency premium volatility. However, a currency board can match dollarization on welfare grounds if the central bank holds a sufficiently large stock of foreign reserves.

Foreign Exchange --- Investments: Bonds --- Macroeconomics --- Money and Monetary Policy --- Model Evaluation and Selection --- Monetary Policy --- Open Economy Macroeconomics --- Monetary Systems --- Standards --- Regimes --- Government and the Monetary System --- Payment Systems --- Macroeconomics: Consumption --- Saving --- Wealth --- General Financial Markets: General (includes Measurement and Data) --- Monetary economics --- Currency --- Foreign exchange --- Investment & securities --- Currencies --- Currency boards --- Consumption --- Bonds --- Dollarization --- Money --- National accounts --- Financial institutions --- Monetary policy --- Economics --- United States

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Zonder onderwerpscode: economie