This paper proves in a New Keynesian model that interest rate pegging can explain the unusual business cycle fluctuations in China. It is traditional wisdom that when the nominal interest rate is inflexible, there is no unique equilibrium in macroeconomic models. We prove that a unique...

In this research, we study a general multi-period inventory model for a buyer and his supplier. We propose an adjustment contract to allow the buyer to adjust his inventory levels upwards or downwards. Thus, the buyer has more flexibility in inventory control so as to reduce his inventory risk....