This paper presents an equation of the dynamic path of prices in a monopolistically competitive market in which firms sell to both old and new customers. Both types are able to search for the lowest price, given search costs, where the expected number of searches is given by the inverse of the...

This paper derives the dynamic implications for price setting in an Edgeworth oligoppoly game with N2 competitors. The impetus to the dynamic game are "conjectured" variations in the prices set by competing firms whereby each firm expresses its belief that a decrease in its own price will be met...

Traditionally, in the Federal Reserve's Open Market statements, the planned Federal Funds rate is set to be contained within well defined bands and not a given single value, so that the funds rate is able to vary freely within that range without interference.This paper provides an explanation of...

The conclusions of a logically consistent economic theory which strictly adheres to Aristotle's axioms of logic are factually true if its sufficient conditions are all factually true. Alternatively, if a conclusion of such a theory is false, then at least one of its assumptions is false....

This paper, written for a Federal Reserve Staff Review of Monetary Control Procedures, explores the short-run volatility consequences of money stock targeting procedures under current (1981) alternative operating procedures. Conclusions include: the odds are at least two to one that a portion of...

Among the many troublesome econometric relationships, the demand for money has proved especially recalcitrant, as evidenced by a long history of tinkering with basic specifications, always in response to some recent perceived forecast failure. The shortcomings of this approach and an alternative...

The optimal control literature traditionally analyzes linear-quadratic Gaussian (LQG) formulations of macroeconomic policy design where policy planers seek to minimize the distance between a direct target vector y and a vector of aspiration levels y*, using a suitably dimensioned matrix M as a...

This paper is a discussion and critique of "Recent Developments in Price Dynamics" by William D. Nordhaus and a distillation of my previous work on the subject. Its main contribution is the proposition that, contrary to previous literature, if prices move dynamically due to optimization, then...

This paper explores Knightian model uncertainty about dynamic misspecification as a possible explanation of the considerable difference between estimated interest rate rules and optimal feedback descriptions of monetary policy. In the literature on robust control, Knightian uncertainty about a...

This paper studies an endogenous growth economy with two sectors owned by a life-time utility maximizing representative household, one sector producing consumption goods and the other sector producing knowledge and technology. The stationary Euler conditions are used to derived relationships...