Several countries around the world have adopted the inflation targeting regime for monetary policy. Despite the growing literature on the issue, it is not clear whether developing and emerging countries can improve their economic performance by adopting inflation targeting. This working paper...

This paper provides derivations necessary for solving an optimal consumption problem with multiplicative habits and a CRRA 'outer' utility function either for a microeconomic problem with both labor income risk and rate-of-return risk or for a macroeoconomic representative agent model.

This paper argues that an increase in the inequality of wealth prompts a stronger quest for status that in turn fosters the accumulation of wealth. It proposes a measure for an individual's want of social status. For a given level of a population's wealth, the corresponding aggregate measure of...

This paper offers two innovations for empirical growth research. First, the paper discusses principal components augmented regressions to take into account all available information in well-behaved regressions. Second, the paper proposes a frequentist model averaging framework as an alternative...

The paper presents a new method to solve DSGE models with a great number of heterogeneous agents. Using tools from systems and control theory, it is shown how to reduce the dimension of the state and the policy vector so that the reduced model approximates the original model with high precision....

Over the last decade, the Iranian government budget on military has been higher than the average of the world. The current increasing international sanctions aim to reduce the military capabilities and capacities of the Iranian government. We analyze the response of the Iranian economy to shocks...

We discuss theoretical approaches to study the relationship between the size distribution of a nation's cities and macroeconomic growth. The discussion is based on the hypothesis of the New Growth Theory that inter-personal spillovers of education and skills determine the long-run growth of the...

This paper presents a novel theoretical and empirical approach to the analysis of long-run economic growth. It shows that most traditional theoretical models share the feature of pair-wise cointegration among the main variables. An augmented Kaldor model is proposed in contrast to the standard...