Lucas (1987, 2003) finds that the welfare costs of business cycles are trivial, 0.008-0.05% of consumption in each period. I analyze the implications of hysteresis for the welfare costs of business cycles by extending the basic New Keynesian model with hysteresis. Hysteresis is defined as the...

I examine the transmission of expansionary U.S. monetary policy in case where developing countries-including China-peg their currencies to the dollar. I evaluate the value of the dollar peg as a fraction of consumption that households would be willing to pay for the dollar peg to remain as well...

Business cycles are an essential part of macroeconomics. However, the study of macroeconomics often ignores the observed business cycles. During and after the global financial crisis, several economists have emphasized that macroeconomics courses will have to be changed. This paper presents a...