Bayesian inference requires an analyst to set priors. Setting the right prior is crucial for precise forecasts. This paper analyzes how optimal prior changes when an economy is hit by a recession. For this task, an autoregressive distributed lag (ADL) model is chosen. The results show that a...

This paper presents an open economy model with tradeable and nontradeable sectors in which households cannot supply labour in both sectors at the same time. In this economy, the Frisch elasticity of labour supply is infinite. I analyse how the infinite labour supply elasticity interacts with the...

A parsimonious model with home production, estimated to match moments of the “labor wedge,” explains prominent puzzles of the international business cycle. If market and home activity are substitutes, then the measured labor wedge increases whenever market consumption and employment...

We document that, at business cycle frequencies, fluctuations in nominal variables, such as aggregate price levels and nominal interest rates, are substantially more synchronized across countries than fluctuations in real output. To the extent that domestic nominal variables are determined by...

This study augments a standard growth model with institutional controls, and models the spatial dependence using geographical and institutional weight matrices. Spatial Durbin model is shown to be the most appropriate to describe the data and political institutions weight matrix best explains...

This paper examines the volatility spillover effects among Mediterranean equity markets and investigates the effects of the 2007 financial crisis. German, Greek, Spanish, Italian and Portuguese markets are investigated. German market is used as a benchmark market. We employ a multivariate...

The objective of this study is to examine the stability of a general equilibrium model in which trade takes place at non-equilibrium prices. Quantity constraints are perceived by the traders and effective demands and supplies are explicitly derived from utility and profit maximization....

This paper investigates spatial diffusion patterns of high levels of violence across Mexican municipalities to nearby locations while also exploring the possible effect of increasing law enforcement resources in some regions of the country. Our approach consists of providing a framework based on...