To be useful as a guide to behavior, a model that includes a relationship between x_t and z_t+1 must specify whether x_t is influenced by the expectation at t of z_t+1 or, that z_t+1 is inertially influenced by x_t. We show that, for a broad class of linear RE models, distinct causal...

Arguments are developed concerning a number of topics including long-run monetary neutrality, superneutrality, the natural-rate hypothesis, the quantity theory of money, the equation of exchange, the Fisher equation, and purchasing power parity. These are basic, fundamental topics that all...

During the past several years, a striking body of literature has appeared in which it is argued that general price level determination is essentially a fiscal, rather than monetary, phenomenon. The most prominent papers have been those of Woodford (1994, 1995, 2001), Sims (1994, 1997), Leeper...

This paper compares the P-bar model of price adjustment with the currently dominant Calvo specification. Theoretically, the P-bar model is more attractive as it depends on adjustment costs for physical quantities rather than nominal prices, while incorporating a one-period information lag....

For introductory presentation of issues involving identification and estimation of simultaneous equation systems, a natural vehicle is a model consisting of supply and demand relationships to explain price and quantity variables for a single good. One would accordingly expect to find in...