This paper introduces agent heterogeneity, liquidity, and endogenous default to a DSGE framework. Our model allows for a comprehensive assessment of regulatory and monetary policy, as well as welfare analysis in the different sectors of the economy. Due to liquidity and endogenous default, the...

Walras' Law is one of the most important tenets of Neo-liberal economics. It is supposed to be a Tautological Identity according to which disequilibrium in market economies has a compensatory nature. Hence, disequilibrium in any market would imply an opposite imbalance somewhere else in the...

This paper aims to integrate the money market into the structure of the economy. The microfoundation is the starting point to define the money market and the general equilibrium mechanism of the economy. On this basis, this research seeks a linking mechanism of the money market with economic...

We build a one-period general equilibrium model with money. Equilibrium exists, and fiat money has positive value, as long as the ratio of outside money to inside money is less than the gains to trade available at autarky. We show that the nominal effects of government fiscal and monetary policy...

This paper analyses the welfare effects of microfinance and inflation in developing countries. Therefore, we introduce a moral hazard problem into a monetary search model with money and credit. We show how access to basic financial services affects households' decisions to borrow, to save and to...

This paper analyzes the optimal monetary policy in a model with a public sector when firms choose prices under incomplete information, and the government can not observe the current state perfectly. We accommodate the notion of Odyssean forward guidance in a framework with a public sector. The...

Harry Johnson's 1971 ideas about the factors affecting the success of the Keynesian Revolution and the Monetarist Counter-revolution are summarised and extended to the analysis of the Rational Expectations - New Classical (RE-NC) Revolution It is then argued that, whereas Monetarism brought...

The present paper aims at describing some key elements of the new classical theory-related model, namely the Real Business Cycle, mainly describing the economy from the perspective of a perfectly competitive market, characterised by price, wage and interest rate flexibility. The rendered...

Harry Johnson’s 1971 ideas about the factors affecting the success of the Keynesian Revolution and the Monetarist Counter-revolution are summarised and extended to the analysis of the Rational Expectations - New Classical (RE-NC) Revolution. It is then argued that, whereas Monetarism brought...

Robert W. Clower's article "A Reconsideration of the Microfoundations of Monetary Theory" (1967) deeply influenced the course of modern monetary economics. On the one hand, it revealed the deadlocks of Don Patinkin's project to integrate monetary and Walrasian value theory. On the other hand, it...