Abstract This paper uses a dynamic framework of a small open economy to study the volatility effects of partially anticipated monetary policy shocks in which the public has imperfect information about the size and/or the timing of the future expansionary policy intervention. Our two main results...

Rational expectations models with news shocks may generate moving average representation that are nonfundamental. The nonfundamentalness typically arises from the lag polynomial associated with news shocks. This paper provides an exact solution formula for this special type of polynomial and...

Abstract This paper integrates a money and credit market into a static approximation of the baseline New Keynesian model based on a money-and-credit-in-the-utility approach, in which real balances and borrowing contribute to the household’s utility. In this framework, the central bank has no...

This book aims to systematically develop a general equilibrium macroeconomic model for both closed and open economies. In the seventh edition, Chapter 8 (The Standard Model of Neo-Keynesian Macroeconomics) has been revised and expanded to include a section on the neo-Keynesian IS-LM model