In this paper, we study how deficit financing is affected by the introduction of habit formation in an otherwise standard Gale (JET, 1973) economy in which the government is a net lender and young agents are borrowing rather than saving. We find that the amount of deficit the government is able...

In this paper I consider a monetary growth model in which banks provide liquidity, and the government fixes a constant rate of money creation. There are two underlying assets in the economy, money and capital. Money is dominated in rate of return. In contrast to other papers with a larger set of...

In this paper, we expand previous models with banks and money and explore the consequences of seasonals in the banking system. We find that, when bank failures occur, not all of them have associated large output losses and currency premiums exist. We show that the most important sources of...

In this paper, we present some techniques used in the dynamical systems literature that let us characterize the stable and unstable manifolds of a given dynamical system. As a result, we can study how an economy behaves as it moves far away from the steady state in an environment where economic...

We propose a simple framework to explore how different market structures in the banking system affect credit allocation, and how deposits and number of entrepreneurs affect the equilibrium number of banks in the economy. We find that within the Marshallian aggregate surplus perspective, the...

while still achieving the socially optimal level of output.

We construct a dynamic, general equilibrium model of tax evasion where agents choose to report some of their income. Unreported income requires using a payment method that avoids recordkeeping – cash. Trade using cash to avoid taxes is the theoretical measure of the shadow economy from our...

In this paper we study the endogenous choice to accept fiat objects as media of exchange, the fundamentals that drive their acceptance, and their implications for their bilateral nominal exchange rate. To this end, we consider a small open economy where agents have no restrictions on what...

In this paper we empirically examine how different regions in Spain and Portugal have been affected by the structural and cohesion funds within the industrial and labor market context. In particular, this study addresses the following questions: (i) have these funds reduced economic disparities...