Increasing returns to scale and firms' market power are two potential sources of sunspot expectations in neoclassical models. We show that in New Keynesian models, returns to scale and market power can have fundamentally different implications for broad macroeconomic issues, including...

We develop a general equilibrium macroeconomic model with endogenous health accumulation, and use the model's equilibrium condition to estimate the elasticity of substitution between medical care and leisure time in maintaining health based on a cross-country panel dataset. Our econometric...