There are conflicting theories about the effect of real exchange rate movements on output growth. Expenditure switching models suggest that a real depreciation leads to an increase in net exports due to the increase in competitiveness of the export sector, and hence to an increase in output...

There is a long literature examining the theoretical relationship between the rate of inflation and the size of the capital stock in an economy. This literature has produced varied predictions about the effects of inflation on the capital stock. In this paper we present some time series evidence...

In this article we present a simple real business cycle (RBC) model, in order to show that these models capture many of the features of business cycles in the real economy. While these models are very abstract, we argue that they are a useful way of thinking about the macro-economy. RBC models...