This paper augments a relatively standard dynamic general equilibrium model with financial frictions in order to quantify the macroeconomic effects of the credit deepening process observed in many Latin American (LA) countries in the last decade, most notably in Brazil. In the model, a stylized...

For a given frequency of price changes, the real eects of a monetary shock are smaller ifadjusting rms are disproportionately likely to have last set their prices before the shock. Thistype of selection for the age of prices provides a complete characterization of the nature ofpricing frictions...

When policy rules are changed, the effect of nominal rigidities should be modelled through endogenous pricing rules. We endogenize Taylor (1979) type pricing rule to examine the output effects of monetary disinflations. We derive optimal fixed-price time-dependent rules in inflationary steady...