We propose a novel method to estimate dynamic equilibrium models with stochastic volatility. First, we characterize the properties of the solution to this class of models. Second, we take advantage of the results about the structure of the solution to build a sequential Monte Carlo algorithm to...

The existing literature on the stabilizing properties of interest-rate feedback rules has stressed the perils of linking interest rates to forecasts of future inflation. Such rules have been found to give rise to aggregate fluctuations due to self-fulfilling expectations. In response to this...

As the millennium draws to an end, the threat posed by the Year 2000 (Y2K) computer problem is inducing vast private and public spending on its remediation. In this paper, we model the Y2K problem as an anticipated, permanent loss in output whose magnitude can be lessened by investing resources...