With Chinese New Year being just around the corner, many are expected to leave Kuala Lumpur behind to visit families and relatives who live outside of the city for a week or so. Many of those living or working in the city have left the city. With the Chinese forming more than 40% of the […]

A good theory has two characteristics: internal consistency and external consistency. An internally consistent theory is one that is parsimonious; it invokes no ad hoc or peculiar axioms. An externally consistent theory is one that fits the facts; it makes empirically refutable predictions that are not refuted. All scientists, including economists, strive for theories that […]

This model provides an example of an economy where real shocks drive output movements. Because the economy is Walrasian, the movements are the optimal responses to the shocks. Thus, contrary to the conventional wisdom about macroeconomic fluctuations, here fluctuations do not reflect any market failures, and government interventions to mitigate them can only reduce welfare. […]