The money demand function has traditionally been estimated with income and interest rates, typically employing quite lengthy time series. Controversy, however, surrounds the importance of heterogeneous agents in monetary economics and throughout macroeconomics more generally. In particular, if...

The international transmission of monetary shocks between the US and Canada is explored. Focusing on real variables such as consumption, investment, employment, and the bilateral trade balance, along with measures of US and Canadian money, the empirical analysis examines the impact of a monetary...

The impact of increased equity trade on a small open economy is examined. Stochastic second-period output depends on first-period investment. Owing to information asymmetries, domestic agents cannot reveal credibly the level of first-period investment to international financiers. Consistent with...

We examine the impacts of both domestic and international financial market development on R&D intensities in 22 manufacturing industries in 18 OECD countries for the period 1990–2003. We take account of such industry characteristics as the need for external financing and the amount of tangible...

Utilizing a panel data set for 13 developed economies, this paper examines the volatility of capital flows following the liberalization of financial markets. The paper focuses on the response of foreign direct investment, portfolio flows, and other debt flows to both financial liberalization and...

This paper explores the relationship between foreign direct investment and remittance flows. Using a panel of 79 countries, we estimate a random effects model and find a positive and significant relationship between the two capital flows. We account for the potential endogeneity of FDI to...

In an overlapping generations economy, lenders fund risky investment projects of firms by drawing up loan contracts in the presence of an informational asymmetry. An optimal contract entails the issue of only debt, only equity, or a mix of the two. The equilibrium choice of contract depends on...

In this paper we use monthly gasoline price data for all fifty U.S. states over the period 1984 to 1999 to examine the incidence of state gasoline excise taxes. Standard economic theory predicts full shifting of the excise tax to consumers when the supply of gasoline is perfectly elastic, and...