This paper solves the century old puzzle about interest rate with Adam Smith's “Of Stock Lent at Interest”. Interest rate is resulted from the interactions between the borrowers and lenders. It is a function of the default rate of lending and the capital's cost, but it also depends on...

This paper disproves the Keynesian Liquidity theory and the IS-LM model. An alternative monetary theory is developed based on Adam Smith's Wealth of Nations. Although interest rate is lowered by monetary expansion, there is no definite effect on output and employment, because of the chaos and...

This paper generalizes the classical duopoly collusion model by first deriving a new marginal cost curve. It then proves that freely colluded duopolists produce more joint output and enjoy larger joint profit than a monopolist, so they have higher incentive to collude. It also distinguishes free...

Despite many evidences of contradiction, the EU theory is still widely used as a convenient tool. This paper proves that the EU theory is harmful, in that people will lose a lot of money by following its decision rules. Some Monte Carlo simulations are conducted to rule out the possibility of...

This paper shows that David Ricardo's gain from trade is miserably small compared with Adam Smith's gain from division of labor. It then proves that Ricardo's comparative advantage means forced exchange. Finally, it shows that Walras' free cooperation theory better explains international trade

This paper proves that most previous studies to solve for the optimal tariff rate have committed various mathematical mistakes. When the mistakes are corrected, such studies actually derive zero tariff rate. This paper then shows that the so-called tariff-protected offer curve does not exist, as...

This paper unveils a serious mistake committed by Kemp (1967). His positive tariff is actually an export subsidy. The corrected Kemp model implies that the whole optimal tariff theory must have been working in the wrong direction

This paper unveils the tricks of how Kahn achieves his optimal tariff theory. When corrected, the optimal tariff turns out to be zero or negative.Apart from David Ricardo's comparative advantage, the most influential theory in the international trade study must be the optimal tariff theory (C....