A prominent feature of US data is the lack of cointegration between nominal interest rates and M1 velocity. Yet, most general-equilibrium monetary models that have been used for empirical analysis have imposed cointegration between these two series. This paper presents as an alternative a...

This paper explores the contention that the dramatic increase in the real price of housing experienced during the 1970s was a cons equence of the interaction of increasing inflation with a nonneutral tax system that discriminates against corporate-held assets. In the c ontext of a dynamic...

The assumption of habit formation in preferences induces two effects on time series of agents' marginal utility of consumption: greater volatility relative to standard time-separable preferences and negative serial correlation. This paper examines whether the second property can help explain the...

The effects of stochastic output shocks on the behavior of exchange rates and nominal price levels is studied within the context of a two-country, cash-in-advance model. The analysis of this model, in contrast to the existing cash-in-advance literature, demonstrates that exchange rates can be...

The real business cycle model dominates business cycle research in the new classical tradition. Typically, real business cycle modelers both offer the bold conjecture that business cycles are equilibrium phenomena driven by technology shocks and also novel strategies for assessing the success of...

In cash-in-advance models, do the timing of markets and the timing of the monetary transfer affect equilibrium money demand? The timing of markets generates different individual money demands; however, under the common assumption that agents are identical, these differences do not affect the...