The current consensus in macroeconomics, as represented by the New Neoclassical Synthesis, is to work within frameworks that combine intertemporal optimization, imperfect competition and sticky prices. We contrast this “NNS triangle” with a model in the spirit of Wicksell and Keynes that...

The crucial role of current account imbalances (CAI) is widely acknowledged in the consensus narratives of the European crisis that followed the Great Recession. On the basis of this interpretation, new EU initiatives arose, in particular the so-called "Six Pack" in 2011 and the establishment of...

We examine the so-called "Neo-Fisherian" claim that, at the zero lower bound (ZLB) of the monetary policy interest rate, and the economy in a depression equilibrium, in order to restore the desired inflation rate the policy rate should be raised consistently with the Fisher equation. This claim...

The current consensus in macroeconomics, as represented by the New Neoclassical Synthesis, is to work within frameworks that combine intertemporal optimization, imperfect competition and sticky prices. We contrast this “NNS triangle” with a model in the spirit of Wicksell and Keynes that...

When inflation is below its target conventional central banking practice is to decrease the nominal interest rate. The reasoning behind this practice is that reducing interest rates increases spending, heats up the economy and increases inflation. However, this conventional wisdom has recently...

Low inflation rates in the Euro Area raise the question of whether inflation is still credibly anchored to the Euro-system's medium term target of below, but close to 2%. The purpose of this paper is twofold. On the one hand, we investigate why agents' inflation expectations that inflation will...

The critical role of current account imbalances (CAI) is widely shared in the consensus narratives of the European crisis that followed the Great Recession. On the basis of this interpretation, new EU initiatives raised, in particular the so-called “Six Pack” adoption in 2011 and the...

The current consensus in macroeconomics, as represented by the New Neoclassical Synthesis, is to work within frameworks that combine intertemporal optimization, imperfect competition and sticky prices. We contrast this “NNS triangle” with a model in the spirit of Wicksell and Keynes that...

When inflation picks up, central banks are most concerned that the de-anchoring of inflation expectations and the ignition of wage-price spirals will trigger inflation dynamic instability. However, such scenarios do not materialize in the standard New Keynesian theoretical framework for monetary...