The optimal rules for the allocation of advertising expenditure when that expenditure affects the demand function facing the firm have been derived for a variety of processes and are relatively well known. The purpose of this paper is to extend the analysis of advertising to include recruitment...

In this paper we embed the Taylor interest rate rule in a simple macroeconomic model with Calvo contracts. We contrast this with the case in which the interest rate is determined by the conventional LM curve along with a fixed value for the monetary aggregate. We derive conditions under which...