It is shown that, in pure exchange economies, the individual demand functions can be recovered from the equilibrium set regardless of the way we evaluate wealth. Following Balasco (2004), the demand functions do not have to be differentiable, not even continuous nor utility maximizing. Thus, the...

This paper utilizes the baseline Real Business Cycle (RBC) model in order to construct a time recursive approximate optimal decision rule as a linear function of the model's state variables and an exogenous surprise shock that hits the economy. The constructed rule is subsequently used in order...

The authors consider a multivariable system comprising a set of macroeconomic variables as inputs, states and outputs. In this setting the authors assess the control potential of fiscal policy versus a large negative business cycle shock that affects the output of the system. The inputs...

A linear control system in the form of a vector autoregressive (VAR) model with an input is considered. The system comprises a set of macroeconomic variables as inputs, states and outputs. The state variables included are the cyclical components of gross domestic product (GDP) and the rate of...

In this note economic integration is viewed as a situation where countries within a union coordinate their industrial policies. We demonstrate that greater regional policy coordination between countries may induce more specialization instead of the intended diversification in interregional...

Following the huge Enron scandal that rocked the financial system of the United States, many firms were asked to restate their accounts by the regulatory authorities. We provide a theoretical model of overstatement in which managers inflate actual profits to attract share capital and...

Developing counties all around the globe have been trying to adopt market-driven institutional systems. As the pace of economic reforms gains momentum, it becomes increasingly evident that these reforms have resulted in new challenges and issues. For example, the economic growth which picked up...

Using the Heckscher–Ohlin–Samuelson–Vanek (HOSV) framework, this paper illustrates a relationship between corruption and the pattern of international trade that depends on the factor endowments of countries. The relationship between trade openness and corruption is empirically investigated...

We consider an economy with two groups of individuals, rich and poor. A central authority can either directly redistribute income to the poor, or allow for some degree of informality in economic activities by not enforcing property rights. The optimal degree of informality depends upon the...