In this paper, we study a decentralized monetary economy witha speci…ed set of markets, rules of trade, an equilibrium concept, and a restricted setof policies and derive a set of equilibrium (monetary) allocations generated by thesepolicies. Next we set up a simpler constrained planning...

Faced with real and nominal shocks, what should a benevolent central bankdo, …x the money growth rate or target the inflation rate? In this paper, wemake a …rst attempt at studying the optimal choice of monetary policy in-struments in a micro-founded model of money. Speci…cally, we produce...

In models of money with an infinitely-lived representative agent (ILRA models), the optimal monetary policyis almost always the Friedman rule. Overlapping generations (OG) models are different: in this paper, westudy how they are different, and why. We investigate the welfare properties of...

This paper analyzes empirically the impact of fiscal policy on the price level for the cases of Germany and Spain. We investigate whether the fiscal theory of the price level (FTPL) is able to deliver a reasonable explanation for the different performances of the price level in these two...

A major criticism against staggered nominal contracts is that they give rise to the so called"persistency puzzle" – although they generate price inertia, they cannot account for thestylised fact of inflation persistence. It is thus commonly asserted that, in the context of thenew Phillips curve...

We disentangle different driving factors of sovereign bond market integrationby studying yield co-movements of EMU countries, the UK, the US and 16German L¨ander in the last 15 years. At a low frequency of weeks, bondmarket integration has increased gradually in the course of the last 15 years...

Evidence on the interdependency between monetary policy and the state of thebanking system is scarce. We suggest an integrated micro-macro approach with twocore virtues. First, we measure the probability of bank distress directly at the banklevel. Second, we integrate a microeconomic hazard...

The paper enquires into the relationship between economic inequality and economic growth, but different from others, it also studies the relationship between inequality and economic growth in the situation where consideration of effect of factor movement is included. The paper tends to answer...

This paper explores the effects of high and low skilled immigration to a hostcountry with unionized low skilled labor and an unemployment insurancescheme. It is shown that the consequences for the labor market and the welfareof natives depend crucially on the host country's production structure....

Germany exhibits a strong reduction in domestic manufacturing production depth (bazaareffect). I argue that this reflects an unbundling of comparative advantage. Using a modelwhere Ricardian plus Heckscher-Ohlin-type comparative advantage relates to fragments ofproduction, I compare a trading...