The traditional view of growth and fluctuations implies that aggregate demand shocks result in only transitory departures from trend or “normal” output, which is determined exclusively by aggregate supply factors. Using a simple dynamic framework for a less-developed economy, a series of models is developed to show that aggregate demand can have a permanent effect on economic growth. It is show...

This work focuses on the supply chain tactical planning problem in an uncertain and disrupted environment. Aspart of point-to-point relationships, we propose an optimal and reactive tactical planning approach of a supply chainlink in the presence of uncertain parameters and disturbances.Our approach is based on a two-level decision structure. The first level performs an aggregat...

This paper analyzes a model that features frictions, an operative labor supply margin, and incomplete markets. We first provide analytic solutions to a benchmark model that includes indivisible labor and incomplete markets in the absence of trading frictions. We show that the steady state levels of aggregate hours and aggregate capital stock are identical to those obtained in the economy with e...

I characterize a large family of monetary policies that implement Milton Friedman’s prescription of zero nominal interest rates in a monetary search economy with multiple assets and aggregate uncertainty. This family of optimal policies is defined by two properties: (i) the money supply must be arbitrarily close to zero for an infinite number of dates, and (ii) asymptotically, on average (over ...

Employing LL iobbDouglas specification for the production function and a modified iinear expenditure system, the paper presents an econometric model of household production, consumption and labor supply behaviour for a semi-commercial farm with a competitive labor market. The model, estimated from p.l,-iary, cross-sectional, Malaysian data, is used :o analyse the impact of migration, output pri...

I develop a general equilibrium life cycle model with an intensive and extensive margin of labor supply and endogenous human capital accumulation. I use the model to assess the effects of changes to various features of social security on labor supply outcomes. Of particular interest are changes to the scale of the program and to the relevant eligibility rules. I find that the cross-country diff...

In our general equilibrium model, the variety of specialized service links affects international production fragmentation in manufacturing. Decreases in cost of education or fixed cost of service links raise the relative supply of skilled workers, increase service specialization, and decrease the price of aggregate services. Consequently, the market for serviceand skill-intensive component manu...

How do frictions in asset markets a¤ect business cycle dynamics? This paper argues that imperfect risk-sharing among heterogeneous households, due to frictions in asset markets, ampli…es price stickiness endogenously and consequently increases the persistence and volatility of business cycles. The main economic mechanism is an idiosyncratic wealth e¤ect on individual household’s labor supply. T...

We analyse the term structure of interest rates in a general equilibrium model with incomplete markets, borrowing constraint, and positive net supply of government bonds. Uninsured idiosyncratic shocks generate bond trades, while aggregate shocks cause fluctuations in the trading price of bonds. Long bonds command a “liquidation risk premium”over short bonds, because they may have to be liquida...

The plan for European Monetary Union (EMU) hangs in part on the incidence of aggregate demand and supply shocks in the participating countries. This paper addresses that question empirically, using a bivariate VAR. Identification of the underlying orthogonal demand and supply shocks is achieved using only long-run restrictions. Data for 16 European countries and 11 West German states (Länder) s...