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No it usually does not. There is an intuitive reason why: We interpret the technology shock as a residual, the unexplainable part in TFP changes. If we knew that there was a specific causal relations …

It's somewhat public knowledge that Macroeconomic models don't fit labor data without High Frisch Elasticity (but Rogerson, Prescott try to argue for that) Preference shocks (but, as Chari, Kehoe, M …

In general, no. As you correctly say, No-Ponzi and Transversality imply that the NPV of real bond holdings go to zero. Since we (in general) have not pinned down inflation paths, this does not imply …

It is agreed upon among economists that trade, mostly through specialization and economies of scale, is welfare improving. Hence, if you want to look at self sufficient countries, you rightfully look …

TTIP is a combination of trade agreements and property rights / legal changes. Trade Liberalization Most of the current debate in European countries is not so much about trade - we all know trade li …

Is this what we're going to face? You're not forced to buy cheap low-quality products. There is still a market for high-quality but expensive products. If demand shifts in the future, we're not going …

This question is too vague to be answered, there are many factors. One, for example: Do the households receive utility from how the government is spending the money? E.g. the government spends it on …

Typically, prices are endogenous in Macroeconomics (and the interest rate is nothing but the price of capital). Absent frictions, prices adjust such that supply equals demand. …

Definition In economics, stagflation, a portmanteau of stagnation and inflation, is a situation where the inflation rate is high, the economic growth rate slows down, and unemployment remains steadily …

The condition is mostly referred to as the No-Ponzi (-scheme) [NP] condition. It is one additional constraint, that prevents Ponzi-schemes: Paying debt with new higher debt, ad infinitum. By the way …

Extensive margin models use Rogerson (1988) style lotteries in order to simplify the savings problem under non-full-insurance. However, one could still write down the model in that style but instead …

Since there is nothing random on the right-hand side, we know that the left-hand-side must be non-random either. Hence, we can drop the expectations operator $$x_t = \beta x_{t+1} + k$$ $$x_{t+1} = \ …

We like to think that profits for monopolistic competition have to decrease because of some usually not-modelled interactions, most importantly that households respond to the pricing markup in a way t …

I used to read Barro 1977 as (1) Prices not moving in a long-term contract is not sufficient for these prices to be suboptimal. That is, there can be an optimal pricing sequence in a long-term c …

I'm looking for scholarly articles or summaries on the subject of markups. More importantly, for empirical evidence whether they're pro- or counter cyclical, and on theoretical papers on their conclus …