Bordo, Michael D.; Erceg, Christopher J.; Levin, Andrew T. - 2006
the Great Depression in our analysis, since it does not appear to fall under the
category of a deliberate deflation.
2 … households’ labor hours in the same proportions
as firms would choose. Thus, the aggregator’s demand for each household’s labor … require a
recession). A notable characteristic of the optimal policy is that it implies a persistent decline in
short …