We present a general equilibrium model of the new neoclassical synthesis that has the same level of generality as the Arrow-Debreu model. This involves a stochastic multi-period economy with a monetary sector and sticky commodity prices. We formulate the notion of a sticky price equilibrium...

This paper introduces agent heterogeneity, liquidity, and endogenous default to a DSGE framework. Our model allows for a comprehensive assessment of regulatory and monetary policy, as well as welfare analysis in the different sectors of the economy. Due to liquidity and endogenous default, the...

We consider the properties of two monetary policy rules ('strict inflation targeting', 'constant money growth rule') in an intertemporal equilibrium model with flexible prices in which monetary policy is 'active', while fiscal policy is 'passive'. Specifically, we assume that the fiscal agent...