This paper explores how accounting consistency affects DSGE models. As many DSGE models descended from real business cycle models, I explore a simple labor-only RBC model and then a simple capital-and-labor RBC model with an exogenous external sector introduced. The conclusion reached in this...

In this paper, another factor that affects equity risk premium is derived from a simple classical monetary model, which basically adds back labor-leisure to a simple consumption-only consumption-based asset pricing model. If every present/future good is traded at time t=0, just as in traditional...

This paper explores dimensional analysis of production and utility functions in economics. As raised by Barnett, dimensional analysis is important in consistency checks of economics functions. However, unlike Barnett's dismissal of CES and Cobb-Douglas production functions, we will demonstrate...

In this paper, several flaws of the basic no-capital/labor-only New Keynesian model are discussed. Some flaws were left undiscovered because mass of varieties n in Dixit-Stiglitz aggregator is often considered as not affecting overall outcomes. Only when n=1 would ordinary results of the basic...

This paper provides a somewhat intertemporal microfoundation for IS-LM in an economy where there is a monopoly issuer of medium of exchange, money. The core microfoundation in this model comes from the Arrow-Debreu general equilibrium result that riskless interest rate may not be uniform across...

This paper presents a simple Ramsey-type model example where two infinitely-living agents have same utility function except for time preference, and shows that equilibrium is indeterminate that is to be interpreted as being non-existent. The issues regarding New Keynesian transversality...

This paper provides a resolution of St. Petersburg paradox using the fact that budget/wealth of people is finite before the game, and that with infinite budget, the paradox obviously is meaningless. The paper also provides an alternate resolution

This paper intends to present a novel perspective on the capital debates. Thomas Piketty, on his book, asserts that the capital debates were virtually meaningless and the neoclassical side won the debates, and this brought several discussions on this point. This paper does not wish to argue that...

This paper develops the Extended Ricardian Equivalence Theorem for helicopter money. It is shown that helicopter money, or money printing, to finance fiscal spending is inconsistent with existence of an equilibrium under ordinary assumptions used to derive the Ricardian Equivalence theorem. By...