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...

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...

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...

We consider a situation where the relatively ‘poor’ are concerned about their relative income status with respect to a relevant reference group. Such a concern is explicitly introduced in a utility function to study the consumption and saving behavior of the poor in terms of a static and...

We build up a simple Ricardian trade model with imperfection in the market for credit which affects the pattern of production. Workers/entrepreneurs are endowed with different levels “capital” and need to borrow to produce the credit intensive good. We argue that in such a framework...

The quest for benefit from existing wealth or by seeking privileged benefit through influence over policy is known as rent seeking. Much rent seeking activity involves government and political decisions and is therefore in the domain of political economy, although it can also take place in...

We propose a two-country growth model of intermediate business-services trade that captures the role of time zone differences. It is shown that a time-saving improvement in intermediate business-services trade involving production in different time zones can have a permanent impact on productivity.

We look at the implications of a cross-border merger upstream in a vertically related industry where no downstream firm can produce all varieties demanded.

The extent of exchange rate pass-through has been playing an increasingly pivotal role in the transmission of exchange rate shocks and adequate policy responses. We develop a model of exchange rate pass-through that allows the stochastic process of exchange rate to include the lagged values of...