A popular interpretation of the Rational Expectations/Efficient Markets hypothesis states that, if the hypothesis holds, then market valuations must follow a random walk. This postulate has frequently been criticized on the basis of empirical evidence. Yet the assertion itself incurs what we...

This paper studies the behavior of producers of capital goods, examining how they set shipments in response to fluctuations in new orders. The paper establishes a stylized fact: the response of shipments to orders is more pronounced when the level of new orders is low relative to the level of...

In standard models wages are too volatile and returns too smooth. We make wages sticky through infrequent resetting, resulting in both (i) smoother wages and (ii) volatile returns. Furthermore, the model produces other puzzling features of financial data: (iii) high Sharpe Ratios, (iv) low and...

Today, Romania and Hungary are two countries sharing the same wish: to become active and responsible members of the new great European family. Even if the start was slightly differentiated – Hungary acceded to the EU in 2004 and Romania in 2007 – the post-adhesion evolutions of the two...

The present paper replaces the standard behavioral axioms by structural axioms and applies these to the analysis of the accumulation and decumulation of capital. This yields a coherent view of the interrelations of real and nominal saving–investment, of profit–loss, of money–credit, and of...

In India, huge progress has been witnessed in the dairy, poultry, fruits and vegetables arena. But as far as cold chain storage is concerned, India lags behind several generations when compared with similar supply chains of the developed world. Further, it is no longer sufficient for any...

The agent-based (behavioural) model is extended to include a financial friction on the supply side. Firms finance capital purchases using external financing, but need to pay for it in advance. In addition, firm financing constraint and net worth are determined by stock market prices, which can...

A series of reforms passed in Italy in 2010 reduced the expected duration of registration and startup procedures for new businesses. Previous research has found that procedural simplifications of this nature have a positive impact on the selection of firm entry in the short run and consequently...

In this paper we propose a macroeconomic model where energy intensity at the macro level responds to changes in energy prices and technological innovations. In our theory those changes operate through the choice of energy efficiency, which is embodied in new vintages of capital that differ due...

The prevailing wisdom that aggregate demand shocks determine short-run cyclical fluctuations around a supply-determined equilibrium growth rate and an associated equilibrium unemployment rate (or NAIRU) has been called into question by various strands of literature over the last few decades....