We present a model embodying moderate amounts of nominal rigidities that 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…
Monetary Economics
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With the collapse of the Bretton Woods system, any pretense of a connection of the world's currencies to any real commodity has been abandoned. Yet since the 1980s, most central banks have abandoned money-growth targets as practical guidelines for…
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We provide evidence on the fit of the New Phillips Curve (NPC) for the Euro area over the period 1970-1998, and use it as a tool to compare the characteristics of European inflation dynamics with those observed in the U.S. We also analyze the…
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We develop a canonical framework to think about credit market frictions and aggregate economic activity in the context of the current crisis. We use the framework to address two issues in particular: first, how disruptions in financial…
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The 'credit channel' theory of monetary policy transmission holds that informational frictions in credit markets worsen during tight- money periods. The resulting increase in the external finance premium-the difference in cost between internal and…
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We use a micro-founded macroeconometric modeling framework to investigate the design of monetary policy when the central bank faces uncertainty about the true structure of the economy. We apply Bayesian methods to estimate the parameters of the…
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The discovery of five neutralities surprised the economics profession and forced the re-thinking of macroeconomic theory. Those neutralities are: the independence of consumption and current income (given wealth); the independence of investment and…
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We develop a quantitative monetary DSGE model with financial intermediaries that face endogenously determined balance sheet constraints. We then use the model to evaluate the effects of the central bank using unconventional monetary policy to combat…
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The rapid growth of international reserves--a development concentrated in the emerging markets--remains a puzzle. In this paper we suggest that a model based on financial stability and financial openness goes far toward explaining reserve holdings…
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David Romer&8217;s Advanced Macroeconomics, 3e is the standard text and the starting point for graduate macro courses and helps lay the groundwork for students to begin doing research in macroeconomics and monetary economics. A series of formal…
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We show that the interest rate on Federal funds is extremely informative about future movements of real macroeconomic variables. Then we argue that the reason for this forecasting success is that the funds rate sensitively records shocks to the…
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In this paper, I show how to use the generalized Schur form to solve a system of linear expectational difference equations (a multivariate linear rational expectations model). The method is simple to understand and to use, and is applicable to a…
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In his admirable book on The Scope and Method of Political Economy John Neville Keynes distinguishes among a positive science a body of systematized knowledge concerning what is; a normative or regulative science, a body of systematized knowledge…
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We lay out a small open economy version of the Calvo sticky price model, and show how the equilibrium dynamics can be reduced to a simple representation in domestic inflation and the output gap. We use the resulting framework to analyse the…
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Welfare-maximizing monetary- and fiscal-policy rules are studied in a model with sticky prices, money, and distortionary taxation. The Ramsey-optimal policy is used as a point of comparison. The main findings are: the size of the inflation…
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"This amazingly comprehensive book provides a lucid explanation of modern macroeconomic theory and applies the theory to a wide range of international issues. For reference and classroom use, it sets a new standard in open economy macroeconomics.…
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Assistant ProfessorUniversity of Wisconsin - Whitewater -
Ph.D. StudentISCTE-IUL -
Ph.D. StudentAbuja, Nigeria
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Ph.D. StudentSuffolk University -
Ph.D. Student