By introducing search and matching frictions in both the labor and the credit markets into a cash in advance New Keynesian DSGE model, we provide a novel explanation of the incomplete pass-through from policy rates to loan rates. We show that this phenomenon is ineradicable if banks possess some...

The interplay of imperfections in several markets is the new frontier of New Keynesian DSGE model research. Following a suggestion put forward by Wasmer and Weil (2004) in a partial equilibrium environment, we introduce search and matching frictions in both the labour and the financial markets...

We study the effects of COVID-19, and the ensuing lockdown and fiscal policies, on the welfare of different age-groups within a life-cycle macroeconomic scheme, adapted from Gertler (1999), where the pandemic is represented as a shock to the mortality rate. We obtain two main results. First, we...