We develop a new model of cycles and crises in emerging markets, featuring an occasionally binding borrowing constraint …‐switching formulation of the occasionally binding borrowing constraint, develop a general perturbation method to solve the model, and … estimate it using Bayesian methods. We find that the model fits the Mexican data well without systematically relying on large …

a central bank should follow is to take a single structural model and minimize the unconditional volatilities of … findings indicate that robust rules, which account for model uncertainty, advocate significantly less aggressive policy …. Ignoring model uncertainty imposes significant costs, while the cost of insuring against this uncertainty is relatively low …

New Keynesian dynamic stochastic general equilibrium model to the empirical responses, and we decompose the multiplier …