We use the method of indirect inference to test a full open economy model of the UK that has been in forecasting use for three decades. The test establishes, using a Wald statistic, whether the parameters of a time-series representation estimated on the actual data lie within some confidence...

This paper investigates optimal indexation in the New Keynesian model, when the indexation choice includes the possibility of partial indexation and of varying weights on rational and lagged indexation. It Önds that the Calvo contract adjusted for rationally expected indexation under both...

We develop a dynamic general equilibrium model of imperfect competition where a sunk cost of creating a new product regulates the type of entry that dominates in the economy: new products or more competition in existing industries. Considering the process of product innovation is irreversible,...

In this paper we consider the entry and exit of Örms in a dynamic general equilibrium model with capital. At the Örm level, there is a Öxed cost combined with increasing marginal cost, which gives a standard U-shaped cost curve with optimal Örm size. Entry is determined by a free entry...

In this paper we show that in a two sector economy with heterogeneous agents and competitive markets, in a steady state the optimal capital income tax rate is in general different from zero. The optimal tax policy in this setting depends on the relative price difference. In a two sector economy...

The explanation of velocity in neoclassical monetary business cycle models relies on a goods productivity shocks to mimic the dataís procyclic velocity feature; money shocks are not important; and the Önancial sector plays no role. This paper sets the model within endogenous growth, adds...

This study examines the productivity growth of the nationwide banks of China over the ten years to 2006. Using a bootstrap method for the Malmquist index estimates of productivity growth are constructed with appropriate confidence intervals. The paper adjusts for the quality of the output by...

This study demarcates cost-inefficiency in Chinese banks into X-inefficiency and rent-seeking-inefficiency. A protected banking market not only encourages weak management and X-inefficiency but also public ownership and state directed lending encourages moral hazard and bureaucratic rent...

The result of Colombo and Labrecciosa [Colombo, Luca and Labrecciosa, Paola (2006). 'The suboptimality of optimal punishments in Cournot supergames', Economics Letters 90, pp. 116-121.] that optimal punishments are inferior to Nash-reversion trigger strategies with decreasing marginal costs is...

We develop the Generalized Taylor Economy (GTE) in which there are many sectors with overlapping contracts of di§erent lengths. In economies with the same average contract length, monetary shocks will be more persistent when longer contracts are present. Using the Bils-Klenow distribution of...