Previous literature on the stability of the US money demand function suggests mixed results. In this article, we study the stability of the money demand function from the standpoint of structural changes in the function. We first investigate if a stable money demand function can be found for the...

In this paper we analyze macroeconomic effects of inflation targeting policy in New Zealand using Markov switching model with one time permanent break. Our results show that the inflation targeting policy has significantly changed the inflation dynamics in the New Zealand economy. The Markov...

Hourly labor costs in the manufacturing sector of seven EC countries, the USA and Canada are used to test the factor price convergence (FPC) by employing Johansen’s multivariate cointegration tests. We also examine if there is a two-way causality in wages between two groups of countries...

Develops a method of forecasting foreign exchange rate by normal mixture model (NMM). Initially establishes a set of exchange rate models and switches from one model to another probabilistically, depending on supply shocks or government policy changes. By assuming that the population...