We present and analyse an optimizing model which explains the counter-intuitive effects of fiscal policy in terms of expectations. If government spending follows an upward-trending stochastic process, which the public believes may fall sharply when it reaches specific `target points', then...

Italian blue chip stocks are now actively traded in two markets: the dealers' market of SEAQ International in London and the traditional auction market in Milan. Analysing their interaction, we find that: 1.The London market for Italian equities has grown rapidly relative to the Milan stock...

This paper uses a stochastic growth model with consumption, saving, portfolio choice between real capital and government bonds and money holding as a cash-in-advance constraint. It shows that money supply changes due to government expenditure changes or open market operations are never...

Recent concern about the difficulty of obtaining structurally stable models of money demand combined with the removal of capital controls have drawn attention to the theory of currency substitution (CS). The purpose of this paper is to examine whether CS is a relevant factor in the demand for...

Several alterantive scenarios for the economic integration of East and West Germany are analysed. They all share an amphasis of the rile of migration and labor mobility in this process. The effects of congestion costs, rigid wages, human capital and heterogeneity of migrants, and endogenous...

Women's disadvantages on the labour market leave them financially vulnerable when divorced. The number of elderly divorced women is growing, but their pension prospects are poor. The paper outlines current British arrangements for pensions and their treatment in divorce, and explains the case...

We consider one polluting industry in an open economy. The national government implements a policy of industrial pollution control by inducing appropriate technological innovations to reduce toxic emissions. The emission-reducing innovations are developed through firm-specific costly...

The EMS's robustness in the face of stochastic shocks is studied, using the Liverpool World Model and the optimal strategy algorithm of Brandsma and Hughes Hallett. The EMS began life in 1979 with a system design permitting regular parity changes; we find this design to be relatively unstable,...

Most markets clear through a sequence of sales rather than through a Walrasian auctioneer. Because buyers can decide whether to buy now or later, rather than only now or never, their current `willingness to pay' is much more sensitive to price than is the demand curve. In consequence, markets...

The paper addresses the following questions. Does bank lending comprise a relatively large amount of finance for investment in Germany, and, if so, is this a consequence of bank representation on companies' supervisory boards (which, it is argued, reduces information asymmetries)? How strong is...