This paper derives an optimal monopoly pricing rule under the assumption that firms facing uncertainty regarding its on the demand curve, are motivated to experiment with small price changes in favor of larger price change because of expected negative reactions. This feature introduces dynamics...

This paper presents an equation of the dynamic path of prices in a monopolistically competitive market in which firms sell to both old and new customers. Both types are able to search for the lowest price, given search costs, where the expected number of searches is given by the inverse of the...

This is an examination of VAR modeling used to generate expectations for forward-looking variables in the Federal Reserve's macro-economic model FRB/US. Aside from analyzing economic as well aseconometric properties of VAR models currently in use, this paper evaluates certain improvements to...

This paper derives and presents mean leads and lags as well as patterns of relative importance weights implied by the PAC (polynomial-adjustment-cost) error-correction equations which form the core of the FRB/US model at the Federal Reserve Board. Relative importance weights measure the...

The macroeconomic costs of disinflation are considered for the United States in a rational expectations macroeconometric model with sticky prices and imperfect information regarding monetary policy objectives. The analysis centers on simulation experiments using the Board’s new quarterly...