This paper discusses how real-life statistical analysis/inference deviates from ideal environments. More specifically, there often exist models that have equal statistical power as the actual data-generating model, given only limited information and information processing/computation capacity....

This paper points out a simple but important “money” issue in New Keynesian models. Once central bank-controlled bonds are included as part of the household budget constraint, New Keynesian models can no longer be considered in money-less framework, if we think of economic logic of the...

This paper provides a somewhat intertemporal microfoundation for IS-LM in an economy where there is a monopoly issuer of medium of exchange, money. The core microfoundation in this model comes from the Arrow-Debreu general equilibrium result that riskless interest rate may not be uniform across...

This paper presents a simple Ramsey-type model example where two infinitely-living agents have same utility function except for time preference, and shows that equilibrium is indeterminate that is to be interpreted as being non-existent. The issues regarding New Keynesian transversality...

This paper resolves the chainstore paradox by viewing each game of a monopolist against a single competitor as a sequential game. Every game is done under perfect and complete information. In this sequential game, with subgame perfection imposed, the number of sequential stages - even or odd -...

This paper develops the Extended Ricardian Equivalence Theorem for helicopter money. It is shown that helicopter money, or money printing, to finance fiscal spending is inconsistent with existence of an equilibrium under ordinary assumptions used to derive the Ricardian Equivalence theorem. By...

Unlike many theoretical analysis of tax effects on household debts in a monetary union, this paper builds up analysis from a household budget constraint, instead of starting from a model. By a monetary union, it is assumed that all nations in the union share same currency. The size of tax...

This paper explores how accounting consistency affects DSGE models. As many DSGE models descended from real business cycle models, I explore a simple labor-only RBC model and then a simple capital-and-labor RBC model with an exogenous external sector introduced. The conclusion reached in this...