When the Lucas paradigm is generalized to include real effects, the effects of real factors and monetary factors on the business cycle are always interrelated. Furthermore, in such m odels, monetary factors can affect the long-run behavior of real outp ut, contrary to the commonly held view that...

This stu dy constructs measures of aggregate price uncertainty for four countries (Canada , West Germany, Great Britain, and the United States) and examines the relationship across countries and through time between the inflation rate, inflation variability, and measures of price uncertainty....

Possible indeterminacy of the price level, when the nominal interest rate is arbitrarily set at some level, is of interest in monetary theory. This paper reexamines this issue within a stochastic macromodel, considering both a "pure" interest rate peg and an interest rate peg as the limiting...