What role does the proportion of fixed versus variable rate debt contracts play in the macroeconomy? We explore this issue by integrating borrowing-constrained households with a quantity-optimising banking sector that lends under either fixed or variable rates. Our framework is then used to...

In the context of economic management, with final targets for money GDP, wealth and the foreign exchange reserves, the exchange rate can be treated as an intermediate target. Monetary policy is used to keep the exchange rate close to its target and the target itself adjusts in response to...

SpaceTime 4.0 is cross-platform mathematics software available for the iPhone/iPad under iOS, as well as other devices. It can be used to implement usable DSGE modeling tools; this includes the solution of linear rational expectations, solving optimal linear-quadratic policy problems, obtaining...

Simple intertemporal consumption theory implies that non-durable consumption is a random walk, but that consumption cointegrates with income and wealth. By the Granger representation theorem, there must be a (vector) error correction mechanism ((V)ECM) representation of the data; but from the...

In the context of economic management, with final targets for money GDP, wealth and the foreign exchange reserves, the exchange rate can be treated as an intermediate target. Monetary policy is used to keep the exchange rate close to its target and the target itself adjusts in response to...

We consider finite horizon conditioning paths for nominal interest rates in New Keynesian monetary policy models. This is done two ways. First, we develop a simple way to use policy interventions in the form of interest rate shocks to achieve the conditioning path and show this yields a unique...

This paper investigates the importance of fiscal policy in providing macroeconomic stabilization in a monetary union. We use a microfounded New Keynesian model of a monetary union, which incorporates persistence in inflation and non-Ricardian consumers, and derive optimal simple rules for fiscal...