When the Lucas paradigm is generalized to include real effects, the effects of real factors and monetary factors on the business cycle are always interrelated. Furthermore, in such m odels, monetary factors can affect the long-run behavior of real outp ut, contrary to the commonly held view that...

This stu dy constructs measures of aggregate price uncertainty for four countries (Canada , West Germany, Great Britain, and the United States) and examines the relationship across countries and through time between the inflation rate, inflation variability, and measures of price uncertainty....

This paper proposes that the Mundellian Trilemma remains valid despite the emergence of a world financial cycle. A clear distinction must be made between monetary policy independence and insulation of an open economy’s financial system. A flexible exchange rate allows an optimizing central...