Because unanticipated monetary expansion leads to real exchange rate depreciation, and because the harms of real depreciation are greater in more open economies, the benefits of unanticipated expansion are decreasing in the degree of openness. Models in which the absence of precommitment in monetary policy leads to excessive inflation therefore predict lower average inflation in more open economies. This paper tests this prediction using cross-country data. The data show a strong and robust negative link between openness and inflation.

This paper examines tax-return-generated data on the labor force behavior of people before and after they receive inheritances. The results are consistent with Andrew Carnegie's century-old assertion that large inheritances decrease a person's labor force participation. For example, a single person who receives an inheritance of about $150,000 is roughly four times more likely to leave the labor force than a person with an inheritance below $25,000. Additional, albeit weaker, evidence suggests that large inheritances depress labor supply, even when participation is unaltered. Warren Kendall … heir to an insurance company fortune … says he's worth about $5 million and has an income of “about, oh, $300 and some thousand a year.” [H]e has never held a job, or wanted to. Going down to sea in cruise ships is his full-time pursuit. He estimates that he has taken about 250 cruises over the past couple of decades, spending at least 50 percent to 70 percent of the year afloat [Morgenthaler, 1991, p. Al].

How does movement toward freer trade affect income disparity among countries? This paper attempts to shed some light on the issue by examining episodes of major postwar trade hberalization within specified groups of countries. The findings suggest a strong link between the timing of trade reform and income convergence among countries.

This paper develops a new measure of reallocation shocks based on the variance of industry stock market excess returns to assess the contribution of sectoral reallocation to unemployment in the postwar U. S. economy. The Beveridge Curve relationship is used to establish that this series isolates reallocation shocks. Reallocation shocks are found to explain only a moderate share of the fluctuations in aggregate unemployment on average over the period. However, reallocation accounted for a substantial share of increases in unemployment in several episodes, particularly the mid-1970s. Reallocation shocks also account for a larger share of fluctuations in unemployment of longer durations than of shorter durations.