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...

The evolution of the economy of Puerto Rico has been characterized by a long period of economic instability, decelerating therefore the economic activity, in most of the studied years. For such reason, in this work, by means of the creation of binary choice models, the factors that affect the...

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...

Reexamining foreign direct investment (FDI) as a potential channel for knowledge diffusion -- based on industry data from seventeen OECD countries during the period 1973-2000 -- we find that FDI-receiving countries benefit strongly from FDI-related knowledge spillovers. We do not find evidence...

We offer the first direct evidence of an implicit contract in a goods market. The evidence we offer comes from the market for Coca-Cola. We demonstrate that the Coca-Cola Company left a substantial amount of written evidence of its implicit contract with its consumers—a very explicit form of...

Potential costs and benefits of a monetary union for the four MERCOSUR countries Argentina, Brazil, Paraguay and Uruguay are compared. Particular emphasis was put on the traditional and new approaches to optimum currency area theory which were reviewed and analyzed with respect to their validity...

Euler equation models represent an important class of macroeconomic systems. Our ongoing research (He and Barnett (2003)) on the Leeper and Sims (1994) Euler equations macroeconometric model is revealing the existence of singularity-induced bifurcations, when the model’s parameters are within...