We analyze the optimal Taylor rule in a standard New Keynesian model. If the central bank can observe the output gap and the inflation rate without error, then it is typically optimal to respond infinitely strongly to observed deviations from the central bank's targets. If it observes inflation...

Partners in emerging risk representative application (ERRA) A3 'Emerging risks related to the industrial use of automated and un-manned surveillance of industrial infrastructure' develop a set of new technologies to automate aerial surveillance by collecting images with a drone and automatically...

Using a life-cycle model in which women divide their time between home and market work, we establish a link between retirement wealth and the value of forgone home production. We use data from the Health and Retirement Study to estimate the model's parameters and adjust the growth rate of GDP to...

Conventional neoclassical investment models predict that firms should make frequent, small adjustments to their capital stocks. Microeconomic evidence however, shows just the opposite – firms make infrequent, large adjustments to their capital stocks. In response, researchers have developed...

We develop a dynamic equilibrium model of labor demand with adverse selection. Firms learn the quality of newly hired workers after a period of employment. Adverse selection makes it costly to hire new workers and to release productive workers. As a result, firms hoard labor and under-react to...

The “neoclassical synthesis” sticky price model exhibits strange behavior when augmented with markets for durable goods with flexible prices. While in the data the output of durable goods responds strongly and positively to a loosening of monetary policy, in dynamic general equilibrium...

We present a model of the market for used cars in which agents face a fixed cost of adjustment, the magnitude of which depend on the degree of adverse selection in the secondary market. We find that, unlike typical models, the sS bands in our model contract as the variance of the shock process...

Phased-in tax reductions are a common feature of tax legislation. This paper uses a dynamic general equilibrium model to quantify the effects of delaying tax cuts. According to the analysis of the model, the phased-in tax cuts of the 2001 tax law substantially reduced employment, output, and...

Over the last fifty years, home production output may have changed significantly due to dramatic increases in women's time allocation to market work. It is important to quantify this change: to the extent that increases in GDP derive from new time allocation patterns, failure to measure...