This note presents a stylized model of monetary and fiscal policies in which policy regime evolves randomly according to a Markov chain. This simple model is designed to illustrate that well-defined and unique equilibria can exist even in such an environment. It also shows that under certain assumptions about policy behavior, tax disturbances can generate wealth effects in line with the fiscal ...

The Ricardian model predicts that countries should produce and export relatively more in industries in which they are relatively more productive. Though one of the most celebrated insights in the theory of international trade, this prediction has received little attention in the empirical literature since the mid-1960s. The main reason behind this lack of popularity is the absence of clear theo...

Presented with the opportunity to trade, countries bene…t by specializing in the activities they do relatively better. This …nding, the principle of comparative advantage, is one of the …rst analytic results in economics. While Adam Smith (1776) made a much earlier case for free trade, he based it on increasing returns to scale, and provided no formal demonstration. In contrast, David Ricardo (...

Abstract This paper analyses determinants of household savings in a model based on an extension the disequilibrium theory. These extensions follow from life-cycle, permanent-income and Ricardian-equivalence theories. Based panel data 20 countries period 2000–2020, fixed-effect least squares estimation procedures are used. The analysis provides evidence that negative interest rates lead to stati...