Economists have long debated the theoretical merits - for an individual nation and for a multi-nation world economy - of alternative approaches to the conduct of economic policy. Yet theory alone cannot resolve the important issues at stake. Only after the robustness of policy regimes has been examined with empirical evidence will policymakers and economists be able to reach more of a consensus. This book makes a move towards meeting the need for a combination of theoretical and empirical evaluation of alternative policy regimes. Many parts of the book use the analytical techniques of stochastic simulation, an evaluation procedure increasingly employed at the frontier of economic analysis. This book is another installment in a continuing worldwide research project, sponsored by Brookings since the mid-1980s, to improve empirical knowledge about the interdependence of national economics. Previous volumes include "Macroeconomic Policies in an Interdependent World", "External Deficits and the Dollar: the Pit and the Pendulum", and "Empirical Macroeconomics for Interdependent Economies".