This paper introduces a framework to study the links between the supply of liquid assets for the financial market and the international allocation of economic activity. Private assets’ liquidity properties—their usefulness as collateral or media of exchange in financial transactions— affect assets’ values and interest rates, with consequences on firm entry, production, aggregate productivity, a...

This paper considers the role of monetary policy in mitigating the effects of financial crises. I suppose that the economy occasionally but infrequently experiences crises, where financial variables directly affect the broader real economy. I analyze the formulation of monetary policy under such financial uncertainty, where policymakers recognize the possibility of financial crises, which leads...

Article history: Received 1 July 2010 Received in revised form 6 March 2013 Accepted 6 March 2013 Available online 16 March 2013 We investigate the transmission mechanism of monetary policy in China over the past decades with emphasis on the post-Asian crisis period. A factor-augmented VAR method is used to study the effectiveness of monetary policy instruments in stabilizing the Chinese econom...

A game theoretic approach to the theory of money and financial institution is given utilizing both the strategic and coalitional forms for describing the economy. The economy is first modeled as a strategic market game, then the strategic form is used to calculate several cooperative forms that differ from each other in their utilization of money and credit and their treatment of threats. It is...

This paper characterizes a stationary Markov-perfect political equilibrium where agents vote over income taxation that distorts educational investment. Agents become rich or poor through educational investment, and the poor have a second chance at success. The results show the following concerning the cost of a second chance. First, when the cost is low, the economy is characterized by high lev...

The aim of this paper is to study the relationship between the shadow economy and corruption as determinants of public debt in the Spanish Autonomous Communities. In addition, we construct a Corruption Perception Index for those regions. Our data constitute panel data for the period 2000–2012. The results show that the volume of the shadow economy has a significant and positive impact on region...

We motivate the formulation of market equilibrium as a mixed complementarity problem which explicitly represents weak inequalities and complementarity between decision variables and equilibrium conditions. The complementarity format permits an energy-economy model to combine technological detail of a bottom-up energy system with a second-best characterization of the overall economy. Our primary...

In this paper we simulate the behavior of a population of boundedly rational agents in a two good economy where all agents can spend their time budget for the production of one or both goods or trading. Agents update their strategies according to a simple imitation type learning rule with noise. It is shown that in several different setups both direct trade and trade via mediators who specializ...

This paper examines the macroeconomic effects of foreign aid transfers in a small open recipient economy. The focus, however, is not on the impact of foreign aid per se but rather on aid’s influence conditional upon the different budgetary financing policies under the discretion of the recipient government. We compare the effects of an aid transfer tied to investment in a public good from a pur...

This paper offers a theoretical and empirical analysis on the sources of the narrowing gender gap in wages. Based on some existing literature, the model posits that the narrowing gender gap may be related to women’s changing comparative advantage and the gender gap is smaller in occupations in which physical labor is less intensively used. The model implies that when an economy transforms from ...