This paper examines the relationship between inflation, exchange rates, and the pattern of international trade and payments in a small economy with utility-maximizing agents and a transactions demand for money. Fully anticipated inflation has real effects in the model through its role as a tax...

We examine the relationship between import competition from low wage countries and the reallocation of US manufacturing from 1977 to 1997. Both employment and output growth are slower for plants that face higher levels of low wage import competition in their industry. As a result, US...

In this paper we derive a model of aggregate investment that builds from the lumpy microeconomic behavior of firms facing stochastic fixed adjustment costs. Instead of the standard (S,s) bands, firms' optimal adjustment policies are probabilistic, with a probability of adjusting (adjustment...

Each of the main explanations of procyclical labor productivity, or short-run increasing returns to labor (SRIRL), is closely associated with a competing theory of the business cycle: Real business cycle theorists attribute SRIRL to procyclical technological shocks, proponents of recent theories...

This paper develops a method for joint estimation of both the degree of internal returns to scale and the extent of external economies. We apply the method in estimating returns to scale indexes for U.S. manufacturing industries at the two-digit level. Overall, we find that only three of the...

When materials offshoring is measured by estimating imported intermediate inputs, a common assumption used is that an industry's imports of each input, relative to its total demand, is the same as the economy-wide imports relative to total demand: this is the so-called "import comparability" or...