n this paper we develop the Generalize Taylor Economy (GTE) in which there are many sectors with overlapping contracts of different lengths. We are able to show that even in economies with the same average contract length, monetary shocks will be more persistent when there are longer contracts....

This paper asks the following two questions: First, can a model with nominal rigidities in wage and price setting account for the average welfare costs of business cycle fluctuations identified in Gali, Gertler, and Lopez- Salido (2003)? Second, what is the role of contracting schemes for the...

We estimate a time-varying coefficient VAR model for the U.S. economy to analyse (i) if the effect of monetary policy on output has been changing systematically over time, and (ii) if monetary policy has asymmetric effects over the business cycle. We find that the impact of monetary policy...

We study optimal monetary policy in a two-sector model. The conventional wisdom in the literature is that the monetary authority should optimally stabilize inflation in the sticky-price sector. We reassess this issue in a two sector economy with capital accumulation subject to adjustment costs....

We study how determinacy and learnability of global rational expectations equilibrium may be affected by monetary policy in a simple, two country New Keynesian framework. We seek to understand how monetary policy choices may interact across borders to help or hinder the creation of a unique REE...

I introduce a method to transform a T-map when agents form expectations using a misspecified learning mechanism inconsistent with a structural equation of a multivariate economic model. By transforming the perceived law of motion (PLM) into a the form of a Seemingly Unrelated Regression (SUR)...

In our dynamic optimizing sticky price model, agents are heterogenous with regard to their assets and their income. Unanticipated inflation redistributes income and wealth. In order to model the wealth distribution, we study a 60-period OLG model with aggregate uncertainty. A positive technology...

Many recent papers, following Gali (1999), have found a negative response of employment to a positive technology shock identified as a permanent shock to labor productivity, contradicting the prediction of standard RBC models. In a recent paper, Christiano, Eichenbaum and Vigfusson (2003) get a...

This paper documents the out-of-sample forecasting accuracy of the New Keynesian Model for Canadian data. We repeatedly estimate the model over samples of increasing lengths, forecasting out-of-sample one to four quarters ahead at each step. We then compare these forecasts with those arising...

This paper presents a monetary model with nominal rigidities and maximizing, rational, forward-looking households, intermediaries and firms. It differs from conventional models in this class in two key respects. First, price (and wage) setters set pricing policies, including an updating rate for...