Empirical evidence suggests that movements in international relative prices are large and persistent. Nontraded goods, both in the form of final consumption goods and as an input into the production of final tradable goods, are an important aspect driving international relative price movements....

This paper compares interest rate and money supply rules. The analysisis conducted within a rational expectations macro model that incorporates flexible prices and informational frictions. With differential information, interest rate targets can affect the information content of market prices...

This paper analyzes the effects of stochastic taxes on production in simple stochastic growth model. In so doing, the paper explicitly examines the importance of uncertainty on the decisions of individual agents. This importance is emphasized by comparing economic outcome to various realizations...

This paper explores the implications of rational expectations and the aggregate supply theory advanced by Lucas (1973) for analysis of optimal monetary policy under uncertainty along the lines of Poole (1970), returning to a topic initially treated by Sargent and Wallace (1975). Not...

This paper provides a detailed examination of various money stock control procedures in a rational expectations environment. A major result is that borrowed reserve targeting is not necessarily equivalent to a noisy funds rate instrument. However, total reserve control, under contemporaneous...