A competitive business cycle model is developed in which internal increasing returns translate a white noise random shock into temporarily agglomerated economic activity. Te qualitative nature of the economy varies over the cycle due to changes in the underlying economic structure, giving rise...

Consumer confidence is found to have predictive content for a wide range of macroeconomic variables including consumption growth, contrary to standard REPIH. We find that on UK data the REPIH is rejected due to the predictive content of consumer confidence, and not labour income. We explain this...

The aim of this paper is to construct theoretical models which help to shed light on the recent criticisms of volatile investment flows. We do not make any empirical attempt to establish the exisitence or gauge the importance of the adverse affects of flows in recent exchange rate crises....

UK and US data suggest that consumption seasonality is both stochastic and characterised by permanent changes, that is there are seasonal unit roots in consumption. This paper explains the changes in the seasonal pattern of UK consumption and in doing so offers new insights into the much studied...

This paper examines the implications of treating seasonality as an unobserved component which changes slowly over time. This approach simplifies the specification of dynamic relationships by separating non-seasonal from seasonal factors. We illustrate this approach using the consumption model of...

We examine the effect of introducing price stickiness into a stochastic growth model subject to a cash in advance constraint. As has been previously documented the introduction of price rigidities provides a substantial source of monetary non-neutrality, leads to a strong positive correlation...

Using a stochastic growth model subject to shocks to productivity, government expenditure and tastes we derive analytical expressions for optimal labour and capital tax rates. We find labour taxes are driven by two factors: (a) a component reflecting Ramsey efficiency considerations and (b) a...

Using a simple state-space approach, this paper documents widespread non-linearities in the UK labour market and shows that these non-linearities can be successfully modeled using the notion of cyclical asymmetries. The economy is shown to display qualitative differences and the impulse response...

We examine the ability of six labour market models to account for the business cycle behaviour of UK labour markets when embedded in a stochastic growth model. WE assess the models in terms of : (i) their ability to mimic general business cycle correlations and volatility (ii) their success at...

A growing literature integrates debt management into models of optimal fiscal policy. One promising theory argues the composition of government debt should be chosen so that fluctuations in its market value offsets changes in expected future deficits. This complete market approach to debt...