Modelling policy issues in a world of imperfect competition

Article Abstract:

A firm that maximizes the real wealth of its shareholders should give minor importance on whether one uses the aggregate demand of the shareholders, a weighted average with shares as weights, the demand of a median shareholder, or some other bundle indicated by the economic contest of a certain model at hand. However, it is necessary that companies should based their goals from purely economic considerations to assure that policy conclusions generated from models with strategically acting firms will not misguide them.

Profit, Profits, Economic development, Monopolistic competition

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On central bank independence and the stability of policy targets

Article Abstract:

An analysis of the relationship between central bank independence and the stability of policy targets reveals that an optimal policy mandate is welfare improving when policy targets are stable. The study also reveals that an independent central bank is costly for the policymaker in the event of policy targets being subject to shocks which are private information of the policymaker even if does not generate a tradeoff between stabilization efficiency and credibility.

Central banks, Monetary policy, Economic indicators

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Rational strategic choice revisited

Article Abstract:

A modification to the rational strategic choice arguments of De Wolf and Forges 1998 paper discussing Bernheim's 1986 paper on rational strategic behavior shows how Bernheim's paper may be improved. The modification involves defining beliefs in terms of unconditional probability distributions so that a belief system is defined as a single set and not a collection of a number of sets.

Methods, Management science, Comparative economics

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