This paper investigates the effect of sales and promotions on the pricing decisions of firms by providing a novel theoretical model where firms face menu costs when adjusting their price and offer items on sale to attract bargain hunters. It is demonstrated that in a recession, the frequency of...

This study attempts to explain low Gdp growth in the post-crisis period, which persisted despite aggressive easing of financial conditions. Agents utilize available funding by either investing in new capital creation or by acquiring existing assets for the capital gain (asset redistribution)....

While paramount to the modern economy, understanding how the banking system works has been usually cast aside from overall economic education. Even in the aftermath of the recent financial crisis, which has underlined the vital importance of banking in the economy, the workings of the sector...

In the aftermath of the European sovereign debt crisis (2009-2014), the management of expectations has risen in importance. However, policy responses have emphasized the management of fiscal spending without examining the impact changes in the business confidence have on the economy. This paper...

In the aftermath of the European sovereign debt crisis (2009–2014), the management of expectations has risen in importance. However, policy responses have emphasized the management of fiscal spending without examining the impact changes in the business confidence have on the economy. This...

This paper decomposes price into its 2 major constituents, namely markup (Mkp) and marginal cost (MC) with which a Markov-switching VAR with fixed transition probabilities is estimated. Since the proposed pair of variables has not been extensively analysed, a theoretical model that derives...