A simple model of monetary/labor search is constructed to exposit and evaluate Keynesian ideas. In the model, economic agents have trouble splitting the surplus from exchange appropriately, and we consider monetary and fiscal policies that correct this Keynesian inefficiency. With either fixed nominal wages and prices, or indeterminacy in rates of exchange, the optimal policies we explore seem ...

This paper investigates the dynamic effects of monetary and fiscal policy in a monetary union, which is characterized by asymmetric interest rate transmission. This asymmetry gives rise to intertemporal reversals in the relative effectiveness of policy on member country outputs. The direction and the number of these reversals depend on whether policies are unanticipated or anticipated. We also ...

I formulate a search-based asset-pricing model where equity shares and fiat money can be used as means of payment. I characterize a family of optimal stochastic monetary policies. Every policy in this family implements Friedman’s prescription of zero nominal interest rates. Under an optimal policy, equity prices and returns are independent of monetary considerations. I also study a perturbation...

Inflation targeting is gaining popularity as a framework for conducting monetary policy. At the same time many countries employ some sort of foreign exchange intervention policy assuming that these two policies can coexist. This paper attempts to show that both policies are not sustainable. Israel is a classic test case. We test our hypothesis using information from the financial markets. The r...

The idea that a common monetary policy in a monetary union imposes costs when compared with independent policies at the country level is largely widespread in the literature. This result leads directly to a greater emphasis on national Þscal policies. We show in this paper that a common monetary policy has more power to asymmetrically affect countries than is usually stated in the literature. A...

In the past decade there have been important changes in the design and conduct of monetary policy around the world. Movements in global capital during the late 1990s and the greater emphasis on price stability forced many countries to abandon fixed exchange rate regimes and to design institutions and monetary policies to achieve credibility in the goal of lowering inflation. Such recent deve lo...

We study experiments of an overlapping generations model where inflation is determined by the monetary policy and by the amount of average saving within each period. We use a new experimental setup that allows us to observe more details of the process of expectation forming and separate this process from the actual saving process. In contrast to experimental findings by Lim, Prescott, Sunder; M...

Under Australian conflict of law rules, courts can enforce foreign judgments for a sum of money, but not judgments that order a party to do or not to do an action. The article argues that the rule against enforcement of non-monetary judgments is no longer relevant in the modern world. It begins by setting out the Australian law on enforcement of foreign judgments and identifying the policies un...