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This paper analyzes a two-commodity short-run macroeconomic model under fixed and flexible rates. The model can be used to illustrate the relationship between elasticities, absorption and monetary approach. The specification of aggregate supply is obviously important, so we examine four...

In this paper, we argue that much of the debate regarding the role of government policy in mitigating economic instability has failed to give sufficient attention to the role of capital markets. We argue that in an economy with well-functioning markets for risk-bearing, direct public...

While the monetary base might be a useful concept for analyzing variation in the money supply, it is a misleading indicator of the central bank's monetary policy. Three intervening institutional considerations are: (1) regulation of interest rates and the central bank's trading in LGS assets...