This paper analyzes the effects of anticipated inflation on the resource allocations between production and financial services. We develop a model with heterogeneous workers and two sectors economy. A manufacturing sector producing a final composite good and a financial sector providing monetary...

This paper investigates the dynamics of output, employment and prices in an economy with costs of adjusting labor and prices. In an economy with non convex adjustments costs, firms do not adjust labor and prices continuously to accommodate every shift in demand. Rather, firms adjust employment...

Much research on the dynamics of the aggregate economy concerns the adjustment policy of the microeconomic units. This paper investigates the optimal adjustment policy when there are seasonal fluctuations and fixed adjustment costs. The optimal policy in this case can be described in terms of...

This paper surveys and examines the sources of fluctuations in inflation and output in Turkey. Using a dynamic open economy aggregate supply - aggregate demand model with imperfect capital mobility and structural vector-autoregressions, the authors consider real oil price, supply, balance of...

Using a dynamic aggregate supply and aggregate demand model with imperfect capital mobility and structural VARs, we decompose inflation and output movements into those attributable to terms of trade, supply, balance-of-payments, fiscal, and monetary shocks. Empirical results show that terms of...

Prevailing trade theory is a neglected stepchild of economics. Micro rejects the sole reason for trade’s occurrence. It declares zero profit in equilibrium. Monetary theory and macroeconomics dismiss concerns of trade financing. They assert that money has nothing to do with traded output, but...

The belief that equality of demand and supply determines price and clears the market is universal. Shockingly, this belief is unfounded. It contradicts macro’s claim that equality of demand and supply determines output. It contradicts (new) monetary theory, which claims that equality of demand...

Keynes (1936) said that shortage of money caused by hoarding or failure to invest led to unemployment, but Lucas (1972) said that money does not affect unemployment. The tables have now turned. Gani (2003) produced a model of indirect trade in which money is necessary as a means of payment....

The aim of this paper is to provide evidence on the nature of the relationship between the terms of trade and the trade balance for US on a scale-by-scale basis using wavelet analysis. Thus, after decomposing the two variables into their time-scale components using to the maximum overlap...

The paper is concerned with a class of trend cycle filters, encompassing popular ones, such as the Hodrick-Prescott filter, that are derived using the Wiener-Kolmogorov signal extraction theory under maintained models that prove unrealistic in applied time series analysis. As the maintained...