This paper re-considers the empirical relevance of the Lucas critique using a sticky price model in which a weak central bank response to inflation generates equilibrium indeterminacy. The model is calibrated on the magnitude of the historical shift in the Fed's policy rule and is capable of...

Inflation in the most industrialized economies of the world has an important international common component that accounts for the historical decline in the national rates. Country specific conditions explain the rise in inflation volatility of the late 1970s and early 1980s, and the subsequent...

Was the Great Moderation in the United States due to good policy or good luck? Taking, as data generation process, a New Keynesian sticky-price model in which the only source of change is the move from a passive to an active monetary rule, we show how standard econometric methods, both...

Recent policy proposals call for setting up a benchmark indexed bond market to prevent "Sudden Stops". This paper analyzes the macroeconomic implications of these bonds using a general equilibrium model of a small open economy with financial frictions. In the absence of indexed bonds, negative...

In our paper we investigate how network effects influence the dynamics of oligopoly on mature telecommunication markets. The model covers four categories of agents: telecommunication operators, customers joined into housholds and market regulator. The market state aware firms use reinforcement...

This paper sets out first, to quantify the stabilization gains from commitment in terms of household welfare and second, to examine how commitment to an optimal or approximately optimal rule can be sustained as an equilibrium in which reneging hardly ever occurs. We utilize an influential...

Efficient algorithms for diagnosing influential data points are investigated. Techniques examining potentially influential subsets are considered. Given a list of candidate observations, a new row-dropping algorithm (RDA) computes all possible observation-subset regression models. It employs a...

Population aging threatens to severely destabilize the public finances of a majority of European countries. This unfavorable demographic prospect is usually reinforced by a widespread tendency to anticipate retirement. Reversing this tendency has been identified as a crucial factor to improve...

Base rate neglect has been shown to be a very robust bias in human information processing. It has also been show to be ecologically rational in some environments. However, when arguing about base rate neglect usually isolated individuals are considered. I complement these results by showing that...

In this paper we show that if all agents are equipped with well-behaved discrete concave production functions, then a feasible price allocation pair is a market equilibrium if and only if it solves a linear programming problem. Using this result we are able to obtain a necessary and sufficient...