This paper examines the theory of contingent demand for price-setting firms when some firms may choose not to satisfy all de mand for their output. The paper develops the theory of household con tingent demand using the theory of effective demand developed by Benn assy (1978). Using the Slutsky...

This paper considers nominal wage flexibility in an economy with heterogeneous labor markets--unionized, competitive, and rigid. The response of unionized wages to demand depends on the behavior of the nonunionized.sector. With a rigid nonunionized sector, wages become pegged to the rigid wage...

In a recent paper, Michael Kiley argued that the Calvo model of price adjustment is both quantitatively and qualitatively different from the Taylor model. What we show is that Kiley (along with most other people) are choosing the wrong parameterization to compare the two models. In effect they...

In this paper we consider the impact of the regulation of telephony on Haan's [2001] analysis of the economics of free internet access. Haan considers an unregulated market, and finds that free internet access is compatible with an efficient outcome and avoids the double marginalization problem....

This paper analyses a small open economy Ramsey model with an endogenous labor supply and no capital. The number of firms is subject to adjustment costs, so that the entry dynamics is determined endogenously. We find that with imperfect competition, there is a first order effect of a demand...

This paper adopts the Impulse-Response methodology to understand inflation persistence. It has often been argued that existing models of pricing fail to explain the persistence that we observe. We adopt a common general framework which allows for an explicit modelling of the distribution of...

n this paper we develop the Generalize Taylor Economy (GTE) in which there are many sectors with overlapping contracts of different lengths. We are able to show that even in economies with the same average contract length, monetary shocks will be more persistent when there are longer contracts....