Publications by Year: 2014

Handbook of International Economics, Vol. 4
Gopinath, Gita, Elhanan Helpman, and Ken Rogoff, ed. 2014. Handbook of International Economics, Vol. 4. Amsterdam: Elsevier, 1-740. Read Online
Aguiar, Mark, Manuel Amador, Emmanuel Farhi, and Gita Gopinath. 2014. “Sovereign Debt Booms in Monetary Unions.” American Economic Review P&P 104 (5): 101-06. Publisher's VersionAbstract
We propose a continuous time model to investigate the impact of inflation credibility on sovereign debt dynamics. At every point in time, an impatient government decides fiscal surplus and inflation, without commitment. Inflation is costly, but reduces the real value of outstanding nominal debt. In equilibrium, debt dynamics is the result of two opposing forces: (i) impatience and (ii) the desire to conquer low inflation. A large increase in inflation credibility can trigger a process of debt accumulation. This rationalizes the sovereign debt booms that are often experienced by low inflation credibility countries upon joining a currency union.
Burstein, Ariel, and Gita Gopinath. 2014. “International Prices and Exchange Rates.” Handbook of International Economics, 4th ed., 4: 391-451. Elsevier, 4, 391-451. Publisher's VersionAbstract

We survey the recent empirical and theoretical developments in the literature on the relation between prices and exchange rates. After updating some of the major findings in the empirical literature we present a simple framework to interpret this evidence. We review theoretical models that generate insensitivity of prices to exchange rate changes through variable markups, both under flexible prices and nominal rigidities, first in partial equilibrium and then in general equilibrium.


Preliminary January 2013.  Prepared for the Handbook of International Economics, Vol. IV.