In this paper risk sharing among individuals within and across regions in a federation with population mobility and infinite horizons is considered. It is shown that the regional authorities will not fully exploit gains from interregional risk sharing when population mobility is imperfect. In...

We consider the effects of inflation in a small open economy when expenditures on non-durables are more heavily financed with money than expenditures on durables. The distinctions between non-durables and durables, and asymmetric cash-in-advance constraints give rise to important dynamics.

If expenditures on non-durables are more heavily financed with money than expenditures on durables then after an increase in the inflation rate there will be capital deccumulation followed by capital accumulation. Money is superneutral in the long run.

Some recent empirical findings are used to motivate employing a model in which consumption exhibits durability, and habits develop over the flow of services provided by them, in order to study the effects of tariff protection on the current account. Durability leads to adjacent substitutability...

We consider a federation with three regions and an imperfectly mobile population. If in the Nash equilibrium one region makes transfers to the other two then the outcome is efficient. If in the Nash equilibrium two regions make transfers to a third region the outcome may be inefficient, because...

A model in which consumption exhibits durability, and habits develop over the flow of services provided by them, is used to study the effects of exchange rate policies. The results of recent studies with regard to the effects of exchange rate policies are brought closer to some recent empirical...

The money in utility model is reconsidered in the presence of endogenous labour and habits. With standard assumptions about preferences and a policy rule that sets the nominal interest rate by adjusting the growth rate of money, the model exhibits superneutrality in the steady state....

In this paper we study the effects of monetary policies on employment, capital accumulation, consumption, and the term structure of interest rates in a cash-in-advance economy, where money is required for consumption expenditures. Monetary policy involves targeting the inflation rate. The...

This paper emphasizes the importance of habit persistence in determining the effect of a permanent distortionary tariff on the current account. A distortionary tariff reduces real permanent income, requiring a fall in the standard of living. If the marginal utility of real consumption is...