By building three nested HANK economies and then constructing a deliberately simple two-agent counterpart for each, this paper argues that what household heterogeneity does to aggregate output can be …
A New Keynesian model is extended with hiring costs that rise in labour market tightness and with real wage rigidity, so that unemployment exists and moves. Under the paper's utility specification the …
Online FirstReview of Economic StudiesOnline 15 May 2026
This paper asks whether a central bank should deviate from strict inflation targeting (SIT) to promote financial stability, studying the question in a textbook New Keynesian model augmented with …
This paper builds a tractable small open economy version of the Calvo sticky-price New Keynesian model, shows its equilibrium reduces to a two-equation system in domestic inflation and the output gap …
PublishedClassicQuarterly Journal of EconomicsPublished Feb 2000
Estimating a forward-looking Federal Reserve policy rule separately for 1960-79 and 1979-96, this paper finds that the Fed let real short-term rates fall as expected inflation rose before Volcker, but …
This paper asks how much of the HANK literature's message about aggregate behaviour survives in a far simpler model, and answers by first identifying exactly what heterogeneity does.
PublishedClassicJournal of Money, Credit and BankingPublished Jan 2007
The standard New Keynesian model implies that stabilising inflation also stabilises the welfare-relevant output gap -- a property the authors name the "divine coincidence" and trace to the absence of …
Gali decomposes measured labor productivity and employment into a technology component and a non-technology ("demand") component, using a bivariate structural VAR identified by a single long-run …
PublishedClassicJournal of Economic LiteraturePublished Dec 1999
This widely cited survey derives monetary policy design from a simple forward-looking New Keynesian model, showing that optimal policy without commitment requires raising the nominal rate more than …