We review the main New Keynesian inflation equations that have arisen as a result of aggregation from individual firms' price rigidities. We find that, on the whole, they cannot account for inflation persistence, a key feature of the empirical dynamics of inflation, and with important policy...

We argue that the interactions among the current account and budget balances and the real interest rate can provide more information about the effective degree of financial openness of an economy than simple saving-investment correlations. Cointegration tests reveal a variety of linkages between...

We investigate the role of fiscal policy when composite (non-utility-enhancing) public services complement private capital in production.

Recent literature suggests the traditional measurement of the degree of international capital mobility by the size of the saving-investment correlation to be flawed. We employ Granger causality tests to measure the degree of capital mobility using quarterly data for a sample of 7 industrialised...

We investigate the implications of constant aggregate returns in production being generated by the combination of private capital and an external factor, as emphasised by the endogenous growth literature. We show that average Q deviates from marginal Q in proportion to the discrepancy between...

We extend the standard Smets-Wouters (2007) medium-sized DSGE model in two directions, namely to analyse the effects of news and the Keynesian multiplier, and secondly to incorporate a fiscal policy rule. We show that both the news channel and the government spending fiscal policy rule...

We develop an endogenous growth model with heterogeneous agents who care about their status in society. Following the social psychology literature, we formalise the idea that the reference standard to which people compare themselves is a choice variable. In such a framework, we analyse the...

We investigate the interactions of price rigidities and storability of goods, and their implications for inflation and growth. The model is an optimising, stochastic general equilibrium one, featuring endogenous growth, the possibility of (short run) excess demand and inflation derived from...