Academic Papers

Rogoff, Kenneth. 1992. “Traded Goods Consumption Smoothing and the Random Walk Behavior of the Real Eschange Rate.” Monetary and and Economic Studies 10: 1-29. NBER Abstract

Conventional explanations of the near random walk behavior of real exchange rates rely on near random walk behavior in the underlying fundamentals (e.g.. tastes and technology). The present paper offers an alternative rationale, based on a fixed-factor neoclassical model with traded and non-traded goods. The basic idea is that with open capital markets, agents can smooth their consumption of tradeables in the face of transitory traded goods productivity shocks. Agents cannot smooth non-traded goods productivity shocks, but if these are relatively small (as is often argued to be the case) then traded goods consumption smoothing will lead to smoothing of the intra-temporal price of traded and non-traded goods. The (near) random walk implications of the model for the real exchange rate are in stark contrast to the empirical predictions of the classic Balassa-Samuelson model. The paper applies the model to the yen/dollar exchange rate over the floating rate period.

NBER Working Paper
Rogoff, Kenneth. 1992. “Dealing with Developing Country Debt in the 1990s.” The World Economy 15: 475–86.
Bevilaqua, Afonso, Jeremy Bulow, and Kenneth Rogoff. 1992. “Official Creditor Seniority and Burden Sharing in the Former Soviet Bloc.” Brookings Papers in Macroeconomic Activity 1: 195-222.
Rogoff, Kennth. 1991. “Review of The Age of Diminished Expectations: U S Economy Policy in the 1990's, by Paul Krugman.” Journal of Economic Literature 29, no. (December): 1753-55.
Rogoff, Kenneth. 1991. “Strategic Perspectives on Economic Policy.” Information, Strategic Behavior and Economic Policy, edited by Andrew Stevenson and David Vines. London: Basil Blackwell.
Froot, Kenneth, Kenneth Rogoff, Olivier Blanchard, and Stanley Fischer. 1991. “The EMS, the EMU, and the Transition to a Common Currency.” NBER Macroeconomics Annual 6, 269-317. NBER. NBER volume;
Bulow, Jeremy, and Kenneth Rogoff. 1991. “Sovereign Debt Repurchases: No Cure for Overhang.” Quarterly Journal of Economics 106: 1219-35.
Rogoff, Kenneth. 1990. “Equilibrium Political Budget Cycles.” American Economic Review 80: 21-36. Abstract

Political business cycle theories generally rely on nominal rigidities and voter myopia. This paper offers an equilibrium theory with preserves some basic insights from earlier models, though with significant refinements. The "political budget cycle" emphasized here is in fiscal policy rather than output and inflation; it arises via a multidimensional signal process. One can consider the welfare implications of proposals to mitigate the cycle, and the effects of altering the electoral structure.

Rogoff, Kenneth. 1990. “Bargaining and International Policy Cooperation.” American Economic Review 80: 139–142.
Bulow, Jeremy, and Kenneth Rogoff. 1990. “Cleaning Up Third-World Debt Without Getting Taken To the Cleaners.” Journal of Economic Perspectives 4: 31–42.
Rogoff, Kenneth. 1990. “"Introduction" to Symposium on New Institutions for Developing-Country Debt.” Journal of Economic Perspectives 4 (1): 3-6.
Gertler, Mark, and Kenneth Rogoff. 1990. “North-South Lending and Endogenous Domestic Capital Market Inefficiencies.” Journal of Monetary Economics 26: 245-266. Abstract

We develop an open-economy of intertemporal trade under asymmetric information. Capital market imperfections are endogenous and depend on a county's stage of economic development. Relative to the perfect-information benchmark, North-South capital flows are dampened (and possibly reversed) and world interest rates are lower. Whereas riskless rates are equalized across borders, the domestic loan rate is higher in poorer countries. The model can be applied to a number of policy issues including the debt-overhang problem, the indexation of foreign public debts, and the effect of income on distribution growth.

Bulow, Jeremy, and Kenneth Rogoff. 1989. “A Constant Recontracting Model of Sovereign Debt.” The Journal of Political Economy 97: 155–178. Abstract

We present a dynamic model of international lending in which borrowers cannot commit to future repayments and in which debtors can sometimes successfully negotiate partial defaulters or "rescheduling agreements." All parties in a debt rescheduling negotiation realize that today's rescheduling agreement may itself have to be renegotiated in the future. Our bargaining-theoretic approach allows us to handle the effects of uncertainty on sovereign debt contracts in a much more satisfactory way than in earlier analyses. The framework is readily extended to analyze the conflicting interests of different lenders and of banks and creditor country taxpayers.

Bulow, Jeremy, and Kenneth Rogoff. 1989. “Sovereign Debt: Is to Forgive to Forget?” American Economic Review 79: 43–50.
Meese, Richard, and Kenneth Rogoff. 1988. “Was It Real? The Exchange Rate-Interest Differential Relation over the Modern Floating-Rate Period.” Journal of Finance 43 (4): 933-948. Download from JSTOR Abstract

In this paper, we explore the relationship between real exchange rates and real interest rate differentials in the United States, Germany, Japan, and the United Kingdom. Contrary to theories based on the joint hypothesis that domestic prices are sticky and monetary disturbances are predominant, we find little evidence of a stable relationship between real interest rates and real exchange rates. We consider both in-sample and out-of-sample tests. One hypothesis that is consistent with our findings is that real disturbances (such as productivity shocks) may be a major source of exchange rate volatility.

Rogoff, Kenneth, and Anne Sibert. 1988. “Elections and Macroeconomic Policy Cycles.” The Review of Economic Studies 55: 1-16.
Bulow, Jeremy, and Kenneth Rogoff. 1988. “The Buyback Boondoggle.” Brookings Papers on Economic Activity 2: 675–698.
Bulow, Jeremy, and Kenneth Rogoff. 1988. “Multilateral Negotiations for Rescheduling Developing Country Debt: A Bargaining-Theoretic Framework.” International Monetary Fund Staff Papers 35: 644–657. Abstract

A dynamic bargaining-theoretic framework is used to analyze multilateral negotiations for rescheduling sovereign debt. The analysis illustrates how various factors, such as the debtor's gains from trade and the level of the world interest rates, affect the relative bargaining power of various parties to a rescheduling agreement. If creditor-country taxpayers have a vested interest in maintaining normal levels of trade with debtor countries, then they can sometimes be bargained into making sidepayments. The benefits from unanticipated creditor-country sidepayments accrue to both lenders and borrowers. But the benefits from perfectly anticipated sidepayments accrue entirely to borrowers.

Rogoff, Kenneth. 1987. “Reputational Constraints on Monetary Policy.” Carnegie-Rochester Conference Series on Public Policy (Supplement to the Journal of Monetary Economics) 26: 141-181.
Rogoff, Kenneth. 1986. “Comment on Edward C. Prescott's Theory Ahead of Business Cycle Measurement.” Carnegie Rochester Conference Series on Public Policy 25, no. (Fall).