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Nominal rigidities and the dynamic effects of a shock to monetary policy
TLDR
The authors present a model embodying moderate amounts of nominal rigidities which accounts for the observed inertia in inflation and persistence in output, and the key features of their model are those that prevent a sharp rise in marginal costs after an expansionary shock to monetary policy.Abstract:
We present a model embodying moderate amounts of nominal rigidities which accounts for the observed inertia in inflation and persistence in output. The key features of our model are those that prevent a sharp rise in marginal costs after an expansionary shock to monetary policy. Of these features, the most important are staggered wage contracts of average duration three quarters, and variable capital utilization.read more
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The Impact of Uncertainty Shocks
TL;DR: In this paper, a model with a time varying second moment is proposed to simulate a macro uncertainty shock, which produces a rapid drop and rebound in aggregate output and employment, which occurs because higher uncertainty causes firms to temporarily pause their investment and hiring.
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Shocks and Frictions in US Business Cycles: A Bayesian DSGE Approach
TL;DR: Using a Bayesian likelihood approach, the authors estimate a dynamic stochastic general equilibrium model for the US economy using seven macroeconomic time series, incorporating many types of real and nominal frictions and seven types of structural shocks.
An estimated dynamic stochastic general equilibrium model of the euro area. NBB Working Paper Nr. 35
Frank Smets,Raf Wouters +1 more
TL;DR: In this article, a dynamic stochastic general equilibrium (DSGE) model with sticky prices and wages for the euro area was developed and estimated with Bayesian techniques using seven key macroeconomic variables: GDP, consumption, investment, prices, real wages, employment and the nominal interest rate.
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When Is the Government Spending Multiplier Large
TL;DR: In this article, the size of the multiplier in a dynamic, stochastic, general equilibrium model was investigated and it was shown that the multiplier effect is substantially larger than one when the zero lower bound on the nominal interest rate binds.
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Presidential Address: Discount Rates
TL;DR: Discount-rate variation is the central organizing question of current asset-pricing research as discussed by the authors, and a survey of discount-rate theories and applications can be found in the survey.
References
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Journal ArticleDOI
Staggered prices in a utility-maximizing framework
TL;DR: In this article, the authors developed a model of staggered prices along the lines of Phelps (1978) and Taylor (1979, 1980), but utilizing an analytically more tractable price-setting technology.
Book ChapterDOI
The role of monetary policy
TL;DR: There is wide agreement about the major goals of economic policy: high employment, stable prices, and rapid growth as discussed by the authors.There is less agreement that these goals are mutually compatible or, among those who regard them as incompatible, about the terms at which they can and should be substituted for one another.
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The Science of Monetary Policy: A New Keynesian Perspective
TL;DR: In this article, a review of the recent literature on monetary policy rules is presented, and the authors exposit the monetary policy design problem within a simple baseline theoretical framework and consider the implications of adding various real word complications.
Journal ArticleDOI
Investment Under Uncertainty
TL;DR: This article defined investment as the act of incurring an immediate cost in the expectation of future rewards, i.e., the payments it must make to extract itself from contractual commitments, including severance payments to labor, are the initial expenditure, and the prospective reward is the reduction in future losses.
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Monetary Policy Shocks: What Have We Learned and to What End?
TL;DR: The authors reviewed recent research that grapples with the question: What happens after an exogenous shock to monetary policy? They argue that this question is interesting because it lies at the center of a particular approach to assessing the empirical plausibility of structural economic models that can be used to think about systematic changes in monetary policy institutions and rules.