The economic analysis of global warming is dominated by models based on optimal growth theory. These representative-agent models have an intrinsic distributional bias in favor of the rich. The bias is compounded by the use of ‘revenue-neutrality’ in the allocation of emission permits. The...

Stylised models of the policy game between monetary policy makers and the private sector have suggested that discretionary policy regimes suffer from an inherent inflationary bias and that precommitment to a target rate of inflation may be desirable. This paper shows that in the presence of...

This paper examines the dynamic implications of a shift in relative prices between traded and non-traded goods. In accordance with empirical evidence we allow for sluggish wage adjustment and the presence of increasing returns to scale in the traded goods sector. The existence of increasing...