This paper indicates how economic analysis can be applied for enlightened policy making with respect to transnational terrorism. Both theoretical tools (e.g., game theory and utilitymaximizing models) and empirical techniques (e.g., time series and spectral analysis) are used to put modern-day terrorism into perspective and to suggest policy responses. From hostage negotiations to the installat...

What determines people’s moral judgments of selfish behaviors? Here we study whether people’s normative views in trust and gift exchange games, which underlie many situations of economic and social significance, are themselves functions of positive emotions. We used experimental survey methods to investigate people’s moral judgments empirically, and explored whether we could influence subsequen...

This paper uses a structurally estimated macroeconometric model, denoted the MC model, to evaluate inflation targeting in the United States. Various interest rate rules are tried with differing weights on inflation and output, and various optimal control problems are solved using differing weights on inflation and output targets. Price-level targeting is also considered. The results show that 1...

It is well known that increasing returns to scale and firms’ market power are two potential sources of sunspot expectations in Neoclassical models. In this paper we show that both the degree of returns to scale and market power can have fundamentally different implications for self-fulfilling expectations in New Keynesian models depending on the nature of price rigidity. As a result, the design...

This paper investigates the disinflation experiences of three countries, Australia, Canada and New Zealand. Unlike previous approaches which have sought to use institutional data to pre-determine the causes, speed and duration of the transitions to low inflation regimes this paper allows price data itself to determine the speed and timing of the reforms using smooth transition analysis. The res...

The author of this article draws special attention to two particular claims the free bankers concerning supposed working characteristics a fractional-reserve banking system which may strike reader as questionable. first these relates alleged absence real-balance effect under banking. second bankers’ reference Walras’ Law providing rationale for system’s «offsetting» actions when confronted with...

We build a model in which the Fed and market disagree about future aggregate demand. The anticipates monetary policy “mistakes,” affect current demand induce to partially accommodate market’s view. expects implement its view gradually. Announcements that reveal an unexpected change Fed’s belief provide microfoundation for shocks. Tantrum shocks arise when misinterprets overreacts announcement. ...

The relationship between financial development and economic growth is the crucial issues which could grab economists and policy makers' attention to it. Financial market plays an essential role on each economy, because it conducts funds to those individuals or firms which have productive investment opportunities. If the financial system does not perform this role efficiently, the economic effic...

I apply the Johansen and Swensen (1999, 2004) method of testing exact rational expectations within the cointegrated VAR (Vector Auto-Regressive) model, to testing the New Keynesian (NK) model. This method permits the testing of rational expectation systems, while allowing for non-stationary data. The NK-model is tested on quarterly U.S. and Euro area time series data. I find that the restrictio...