In this paper I propose and estimate a model of output and price adjustment which explicitly parameterizes both supply-side persistence and NRH-GAP price-stickness. The model is designed to incorporate general patterns of both phenomena and to reveal their relative importance. The rational...

Empirical studies and much marketplace opinion have it that the spread between private money market rates and the U.S. Treasury bill rate of comparable maturity is due to differential default risk, liquidity risk, and relative supplies. This paper presents an argument and empirical evidence that...