A unified model of monetary policy and bank regulation is presented. In accordance with modern banking theory, banks not only intermediate loans and deposits but also provide a financial service affecting aggregate output. Optimal parameter settings for monetary and regulatory policy are...

Theimplications of technical change that directly alters factor shares are examined. Such change can lower the income of some factors of production even when it raises total output, thus offering a possible explanation for episodes of social conflict such as the Luddite uprisings in 19th century...

Data quality in the Penn World Tables varies systematically across countries that have different growth rates and at different stages of economic development, thus introducing measurement error correlated with variables of economic interest. We explore the seriousness of this problem with three...

Friedman's Permanent Income Hypothesis (PIH) predicts that the income elasticity of consumption should be higher for households for which a large fraction of the variation of their income is permanent than for households facing more transitory variations in income. We test this prediction using...

We introduce a new measure of the extent of federal regulation, the number of pages in the Code of Federal Regulations, and use it to investigate the relationship between federal regulation and macroeconomic performance in the U.S. We find that regulation has statistically and economically...

A transactions model of the demand for multiple media of exchange is developed and applied to the study of currency substitution. The analysis provides a theoretical foundation for results reported in the empirical literature. Some results are expected, such as the dependence of currency...

Trade is shown to affect economic growth purely through comparative advantage; unlike previous literature, this result does not depend on the presence of scale effects, technology transfer, research and development, or even international investment. The resulting growth rates are those that would...

Endogenous growth requires that non-reproducible factors of production be either augmented or eliminated. Attention heretofore has focused almost exclusively on augmentation. In contrast, we study factor elimination. Maximizing agents decide when to reduce the importance of non-reproducible...

Data quality in the Penn World Tables varies systematically across countries that have different growth rates and are at different stages of economic development, thus introducing measurement error correlated with variables of economic interest. We explore this problem with three examples from...