E50

Joel P. Flynn · George Nikolakoudis · Karthik A. Sastry

Modern macroeconomic models of aggregate supply universally restrict firms to price-setting — committing to a price and supplying whatever quantity the market demands. Flynn, Nikolakoudis, and Sastry …

Frank Smets · Raf Wouters

A sticky-price, sticky-wage dynamic general equilibrium model of the euro area, with habit formation, investment adjustment costs and variable capacity utilisation, is estimated by Bayesian methods on …

Felipe Del Canto · John Grigsby · Eric Qian · Conor Walsh

The paper asks whether inflationary shocks are regressive, and demonstrates that the answer depends critically on the source of the shock. A single aggregate inflation statistic conceals radically …

Ben S. Bernanke · Mark Gertler · Simon Gilchrist

Embedding a costly-state-verification debt contract -- in which a borrower's external finance premium depends inversely on net worth -- into an otherwise standard New Keynesian model, this chapter …

Fernando Alvarez · Katarína Borovičková · Robert Shimer

This paper asks two related questions. First, can one develop a robust, distribution-free estimator for the discrete-time mixed proportional hazard (MPH) model of duration with unobserved …

Wenhao Li · Ye Li

Crises have cleansing effects—low-quality firms face greater financial shortfalls and invest less than high-quality firms—but public credit support dampens these effects by reducing financing cost …

David Altig · Lawrence J. Christiano · Martin Eichenbaum · Jesper Lindé

Estimated New Keynesian models reconcile inertial inflation with Calvo pricing only by forcing firms to re-optimise prices once every two years or more, which micro price data contradict. Making …

Carlos Arteta · Steven Kamin · Franz U. Ruch

This paper examines how the effects of rising U.S. interest rates on emerging market and developing economies (EMDEs) depend on the underlying source of the interest rate increase. Specifically, it …

Florin O. Bilbiie

THANK, a tractable heterogeneous-agent New Keynesian model built around a single statistic for the cyclicality of income inequality, shows that the conditions needed for HANK-style amplification of …

Davide Debortoli · Jordi Galí

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.

Thomas Drechsel

This paper combines a hand-collected archival data set of over 800 personal interactions between U.S. Presidents and Federal Reserve officials from 1933 to 2016 with a narrative structural VAR to …

Olivier Blanchard · Jordi Galí

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 …

Frank Smets · Rafael Wouters

A New Neoclassical Synthesis model of the US economy with seven structural shocks and a full set of real and nominal frictions is estimated on seven quarterly series by Bayesian methods, and shown to …

Alisdair McKay · Emi Nakamura · Jón Steinsson

This paper shows that the standard New Keynesian prediction that forward guidance about interest rates far in the future is at least as powerful as guidance about current rates -- and grows …

J. Bradford De Long

Tracing the 20th-century history of "monetarism" through four successive subspecies, De Long argues that although monetarism's most politically influential and empirically fragile form collapsed in …