Online appendix for the Review of Economic Dynamics article

Allowing habits to be formed at the level of individual goods – deep habits - can radically alter the fiscal policy transmission mechanism as the counter-cyclicality of mark-ups this implies can result in government spending crowding-in rather than crowding-out private consumption in the short...

Recent work on optimal policy in sticky price models suggests that demand management through fiscal policy adds little to optimal monetary policy. We explore this consensus assignment in an economy subject to ‘deep’ habits at the level of individual goods where the counter-cyclicality of...

In this paper we consider the implications of habits for optimal monetary policy, when those habits either exist at the level of the aggregate basket of consumption goods (`superficial' habits) or at the level of individual goods (`deep' habits: see Ravn, Schmitt-Grohe, and Uribe (2006))....

Recent work on optimal policy in sticky price models suggests that demand management through fiscal policy adds little to optimal monetary policy. We explore this consensus assignment in an economy subject to ‘deep’ habits at the level of individual goods where the counter-cyclicality of...

While consumption habits have been utilised as a means of generating a humpshaped output response to monetary policy shocks in sticky-price New Keynesian economies, there is relatively little analysis of the impact of habits (particularly,external habits) on optimal policy. In this paper we...

This thesis is composed by four chapters on New Keynesian macroeconomics.Chapter 1 develops a small New Keynesian model augmented with a steady state level of public debt and a share of rule-of-thumb consumers (ROTC henceforth) as in Galí etal. (2004; 2007). This chapter focuses on the consequences...

We study Ramsey monetary and fiscal policy in a small scale New Keynesian<br/>model where government spending has intrinsic value, public debt is<br/>state-noncontingent and the fiscal authority is constrained by using<br/>distortive taxation. We show that Ramsey policy is remarkably altered when<br/>consumption...