The sticky-information model appeared in order to offer a more empirically consistent view on the effects of monetary policy than the one provided by the benchmark sticky prices setup. Such inattentiveness framework was built on the assumption that current decisions are mainly based on past...

Recent research has examined the link between rising educational attainment and its impact on inflation, via the equilibrium rate of unemployment. Studies such as Daly et al. (2007) have found that a measure of aggregate unemployment that has been adjusted for changes in the educational...

We test for and model nonlinearity of the reduced-form U.S. Phillips curve using the smooth transition regression (STR) framework. We find evidence of two regimes: a “high inflation regime†associated with fast rising food and energy prices and a “low inflation regimeâ€...

This paper empirically analyzes the determinants of foreign direct investment for Sub-Saharan African countries and other some developing countries. Our results suggest that both productivity-related policy and exchange rate policy can be effective in sharpening FDI competitiveness, i.e., in...

We extend the Ravn, Schmitt-Grohe and Uribe (Review of Economic Studies, 2006) model of external deep-habits with the idea that some product varieties are more prone to habit formation than others. This s uncertainty in habit formation which affects firm's pricing. Provided that uncertainty is...

Christiano and Fitzgerald (2003) found a significant, positive correlation between M2 money growth and CPI inflation in all examined frequency bands for the U.S. prior to 1961. However, for post-1960 data, they found a positive correlation only in the frequency band corresponding to cycles of...

In a highly disaggregated product-level sample of monthly frequency prices, the degree of persistence in cross-location price differentials is estimated. When location specific effects are accounted for in measuring price differentials, the median half-life of the conditional convergence to the...

This paper quantifies the welfare costs of inflation in an endogenous growth setup when transitional dynamics are taken into account. We report much smaller costs than when these dynamics are omitted.

This paper measures the accuracy of using regional cycles to identify national business cycle turning points in the U.S. with the Markov Switching Panel (MSP) model. Based on the MSP model, it is determined that regional cycles are highly capable of identifying national business cycle turning...

Following a positive technology shock, a flexible price monetary model with catching up with the Joneses utility function can easily generate a negative and persistent decline in employment. When the effect of relative consumption is large, the model also produces a small short run response of...