In recent years, monetary business cycle models with monopolistic competition and staggered price setting have been widely used to study the implications of alternative specifications of monetary policy. One shortcoming of these models, however, is that they typically do not include a very detailed description of the labor market, and are therefore not suited to discuss the relationship between monetary policy and unemployment. In the labor market literature, on the other hand, search and matching models with equilibrium unemployment have been fairly successful in explaining aggregate labor market fluctuations. Such labor market specifications have recently been extended to monetary business cycle models, originally by Trigari (2004, 2006) and Walsh (2005b), and thus present a natural alternative to the standard monetary framework.
Christiano, Eichenbaum, and Evans (2005) and Smets and Wouters (2003) have demonstrated that nominal wage rigidities are a crucial ingredient when explaining U.S. business cycles, using monetary business cycle models without search and matching frictions. Within a similar model, Levin, Onatski, Williams, and Williams (2005) have shown that wage rigidities account for the main welfare cost of business cycle fluctuations, and that a monetary policy rule that responds only to nominal wage inflation performs almost as well as the welfare optimizing policy. However, these results are very sensitive to the precise form of wage rigidities, suggesting that the specification of the labor market has important consequences for monetary policy.
The prevalence of obesity in American Indian/Alaska Native (AI/AN) populations has increased dramatically over the past 30 years. Although AIs are not a homogeneous group, all tribes throughout the U.S. have suffered adverse effects from the high prevalence of obesity (Story et al, 2000)). Overall, studies demonstrate that obesity begins early for AI/AN children and also is a significant problem for the adult population (IHS, 2001). Many chronic diseases such as type 2 diabetes, heart disease, stroke, arthritis, and breathing problems are associated with the increasing prevalence of obesity in AIs (DHHS, 2001, Story et al, 1999).
The problem of obesity is not unique to AI/ANs. Overweight and obesity have reached epidemic proportions both nationwide and globally (Ogden et al, 2006; Washington, Post, 2006). The existence of these epidemics indicate that in addition to personal responsibility, societal factors such as convenience technology and engineering; food production and marketing patterns; and powerful social and cultural forces that have shaped our communities, our lifestyles and ultimately our bodies play an important role in this problem (McGinnis, 2004).
Corporate liquidity management has been a growing research area in corporate finance during the past ten years. Meanwhile, the effect of financial constraints on corporate behaviors remains to be a topic of continued interest. Despite the extensive research on each subject, few studies have been done by combining these two research lines to examine the effect of financial constraints on corporate liquidity management.
Previous literature in corporate liquidity management and financial constraints have largely concentrated on the role of cash holdings (we call it as “internal liquidity”). For instance, Opler et al. (1999) examine the determinants and implications of holdings of cash and find that firms with strong growth opportunities and riskier cash flows hold more cash. Almeida, Campello, and Weisbach (2004) show that the effect of financial constraints can be captured by the firm’s propensity to save cash out of cash flows (“cash flow sensitivity of cash”). However, these studies do not consider the role of bank lines of credit (we call it as “external liquidity”). Given that bank lines of credit serve as a viable liquidity substitute to firms and help reduce capital market frictions (Holmstrom and Tirole (1998)), it would be surprising if one does not take into account the external liquidity when studying the effect of financial constraints on corporate liquidity management.
