The rational expectations hypothesis (REH) is based on two assumptions. The first is that, economic agents learn through experience how to avoid systematic errors. The second is that these errors are identified with reference to a model. Imperfect information may lead economic agents to...

Analyzing prices of truly homogenous consumer goods sold in Euroland, we find significant price convergence after the Euro cash changeover in 2002. The deviation of national log prices from the mean log price of the same product is much narrower with the Euro than before. We observe Sigma and...

This paper investigates whether the ‘big tradeoff’ between efficiency and inequality exists, and analyzes empirically the relationship between inequality, redistribution, and employment/unemployment. The analysis is based on a cross-country longitudinal data set (panel data) of 21 OECD...

Are efficiency improvements in the use of natural resources the key for sustainable development, are they the solution to environmental problems, or will second round effects –so-called rebound effects- compensate or even overcompensate potential savings, will they fire back? The answer to...

The current crisis is like an earthquake for the theoretical foundations of economic policies, which have guided governments and central banks for the last few decades. The efficient market hypothesis and its application to labor markets –“natural rate theory”- dominated interpretations of...

Almost all institutions - employment protection legislation, unions, wages, wage structure, unemployment insurance, etc. - have been alleged and found guilty to have caused this tragic development at some point in the long history of rising and persistent unemployment in Europe. US labor market...

In the long history of rising and persistent unemployment in Europe almost all institutions - employment protection legislation, unions, wages, wage structure, unemployment insurance, etc. - have been alleged and found guilty to have caused this tragic development at some point in time. Later,...