The two-good model (consumer and capital goods) suggested by J. Tobin and W. C. Brainard (1969) and formalized in a static model by D. W. Henderson and T. Sargent (1973, 1979) is generalized to a dy namic model with rational expectations. Financial markets determine r elative goods prices. With...

The City reaction to Mr Major's first Budget was generally one of disappointment, partly because fiscal policy was perceived as lax, partly because nothing new was said about the European Monetary System (EMS). Subsequent ministerial speeches gave a more positive tone to the Government's...