One of the long-standing questions in economics is whether or not wages will fall sufficiently in recessions so as to avoid increases in unemployment. Put differently, if the competitive market wage declines, will employers simply force their employees to accept lower wages as well? As an...

The purpose of this article is to report on a comparison of several alternative numerical solution techniques for nonlinear rational-expectations models. The comparison was made by asking individual researchers to apply their different solution techniques to a simple representative-agent,...

This paper summarizes recent Bayesian research on unit roots for the applied macroeconomist in the way Campbell and Perron [8] summarized the classical unit roots perspective. The appropriate choice of a prior is discussed. In recognizing a consensus distaste for explosive roots, I find the...

Let $X(i),$$i\in [0;1]$ be a collection of identically distributed and pairwise uncorrelated random variables with common finite mean µ and variance $\sigma^{2}.$ This paper shows the law of large numbers, i.e. the fact that $\int^{1}_{0}X(i)di=\mu .$ It does so by interpreting the integral as a...

Should one think of zero nominal interest rates as an undesirable liquidity trap or as the desirable Friedman rule? I use three different frameworks to discuss this issue. First, I restate Cole and Kocherlakota's (1998) analysis of Friedman's rule: short run increases in the money stock -...

In this paper, I investigate the scope of a model with exogenous habit formation - or `catching up with the Joneses`, see Abel (1990) - to generate the observed equity premium as well as other key macroeconomic facts. Along the way, I derive restrictions for four out of eight parameters for a...

This paper compares monetary policy in the US and EMU during the last decade, employing an estimated hybrid New Keynesian cash-in-advance model, driven by five shocks. It appears that the difference between the two monetary policies between 1998 and 2006 is due to both surprises in productivity...

Should one think of zero nominal interest rates as an undesirable liquidity trap or as the desirable Friedman rule? I use three different frameworks to discuss this issue. First, I restate Cole and Kocherlakota's (1998) analysis of Friedman's rule: short run increases in the money stock -...

The goal of this paper is to examine the shape of the Laffer curve quantitatively in a simple neoclassical growth model calibrated to the US as well as to the EU-15 economy. We show that the US and the EU-15 area are located on the left side of their labor and capital tax Laffer curves, but the...