Labour Matching Models

Labour matching models stem from the fact that when a worker becomes unemployed, he needs to look for a job and such a process is not instantaneous. He cannot simply occupy any vacancy, but has to search for a job in a certain area, in a certain profession and which matches a list of criteria Read more about Labour Matching Models[…]

Neoclassical Business Cycles

Aggregate data do not lend support to neoclassical business cycle models. Discuss this statement paying particular attention to inter-temporal decisions about consumption, labour/leisure and investment. According to Prescott the reason for business cycles is due to technology shocks which manifest itself as changes in the TFP productivity term (or Solow residual) A. Summers criticises this Read more about Neoclassical Business Cycles[…]

Search Markets

In the context of the search model of the labour market, Peter Diamond (1971) raised the following critique: Firms have no incentive to offer a wage higher than the reservation wage. Discuss. Economic theory may initially have us believe that firms shouldn’t offer a higher wage than the reservation wage of workers. If they did Read more about Search Markets[…]

The Credit Channel

The credit channel is an enhancement mechanism for traditional monetary policy transmission, not a truly independent or parallel channel. Discuss The traditional monetary policy transmission works through a number of conventional channels: interest rate effect, exchange rate effect, asset price effect and through expectations. The stance of monetary policy acts as a signal to firms Read more about The Credit Channel[…]

What is Social Ontology and why should Economists care?

Literally, social ontology is the study of social nature and it concerns itself with “how existents exist”1. It is the study of the social realm which includes the “domain of all phenomena, existents, properties”2 whose existence depends upon humans and their interactions. To paraphrase Little “almost all human action is social: socially oriented, socially embedded or socially Read more about What is Social Ontology and why should Economists care?[…]

The Relationship Between Debt and Growth

The debt-growth nexus has received renewed interest among academics and policy makers alike in the aftermath of the recent global financial crisis and the subsequent euro area sovereign debt crisis. Discuss whether there exists a tipping point, for public indebtedness, beyond which economic growth drops off significantly; and more generally, whether a build-up of public Read more about The Relationship Between Debt and Growth[…]

Investment Functions

In this article we explain the fundamental factors determining investment decisions of firms, which comprise the investment function. By determining the structure of the investment function we can hypothetically estimate this and thus predict how much a given firm ought to be investing, given economic fundamentals. This is interesting because we could then aggregate such Read more about Investment Functions[…]