Empirical evidence suggests that the flexibility of labor supply is closely related to the dynamic adjustment of the real exchange rate. This paper investigates this relationship in a two-sector dependent economy model. While, the long-run equilibrium real exchange rate is independent of the...

Empirical evidence suggests (i) that the real exchange rates of developing economies show less persistence than do those of more advanced economies and (ii) that the elasticity of substitution between capital and labor tends to increase from below unity for less developed economies to above one...

This paper studies the differences between private and government provision of infrastructure. Capital utilization decisions and their differential role in determining market prices for capital goods under the two regimes of infrastructure provision serve as a critical transmission mechanism for...