In this paper, we present a simple but rigorous model of the dynamics of output and unemployment in transition. We consider a worker-entrepreneur, who is "locked in" to her current production technique, with a choice of continuing to work with it or search for a better technique. If she...

We argue that the traditional question 'fixed vs. flexible exchange rates?' is not well-defined, because 'flexible exchange rates' does not explicitly specify any particular monetary policy. In traditional analyses, 'flexible exchange rates' was interpreted as implying a fixed money supply. But...