We construct a two-country DSGE model with multiple stages of processing and local-currency staggered price-setting to study cross-country quantity correlations driven by monetary shocks. The model embodies a mechanism that propagates a monetary surprise in the home country to lower the foreign...

Empirical studies reveal that monetary policy shocks generate long-lasting effects on real GDP, countercyclical real wages before World War II and procyclical real wages afterwards. In this paper, we construct a dynamic general equilibrium model to explain the observed output persistence and the...

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Staggered price and staggered wage contracts are commonly viewed as similar mechanisms in generating persistent real effects of monetary shocks. In this paper, we distinguish the two mechanisms in a dynamic stochastic general equilibrium framework. We show that, although the dynamic price...

Although CPI inflation and PPI inflation are both readily observable, the latter has received much less attention in the design of optimal monetary policy, despite the apparent difference in the cyclical behaviors of the two price indices. This paper constructs a sticky-price DSGE model, in...

This paper empirically estimates a balanced-growth consistent, dynamic, structural model of intertemporal consumption and asset pricing that allows for, but does not assume, the Gul-Pesendorfer preferences of temptation and self-control, using synthetic panel data constructed from the Consumer...

This paper proposes a unified theory to explain two observed patterns of international business cycle comovements: 1) The correlations in aggregate output and in consumption between OECD countries tend to be much higher than those between emerging market economies such as Latin America; and 2)...

Staggered price and staggered wage contracts are commonly viewed as similar mechanisms in generating persistent real effects of monetary shocks. In this paper, we distinguish the two mechanisms in a general equilibrium framework. We show that, although the dynamic price setting and the dynamic...

This paper studies a general equilibrium model with multiple stages of production and asynchronized price setting that provides a new explanation for the observed persistent real effects of monetary shocks. The key feature of the model is a vertical chain-of-production structure. In this model,...

In an economy with nominal rigidities in both an intermediate good sector and a finished good sector, and thus with a natural distinction between CPI and PPI inflation rates, a benevolent central bank faces a tradeoff between stabilizing the two measures of inflation: a final output gap, and...