Gali, Jordi; Smets, Frank Rafael; Wouters, Raf - Narodowy Bank Polski - 2012
We reformulate the Smets-Wouters (2007) framework by embedding the theory of unemployment proposed in GalĂ (2011a,b). We estimate the resulting model using postwar U.S. data, while treating the unemployment rate as an additional observable variable. Our approach overcomes the lack of...