This paper presents an alternative framework for modeling the behavior of banks in setting lending and/or saving rates. In a short-run dynamic model, we correct for deviations from the long-run path using three feedback coefficients capturing different disequilibria. This enables us to test for...

This paper examines the way in which output gap influences quarterly inflation during the period 1970q1–2013q1 in Canada, the UK and the US by adopting a Markov regime-switching model. In addition to the regime-dependent effects of the output gap, this study controls for the regime-invariant...

The existence of a valid long-run money demand function is still important for the conduct of monetary policy. It is argued that previous work on the demand for money in Australia has not been very satisfactory in a number of ways. This paper examines the long- and short-run determinants of the...