This paper provides a bird's eye view of the Behavioural New Keynesian literature. We discuss three key empirical regularities in macroeconomic data which are not accounted for by the standard New Keynesian model, namely, excess kurtosis, stochastic volatility, and departures from rational...

This paper introduces unemployment hysteresis into a tractable New Keynesian three equation model using an insider-outsider labour market. We demonstrate that strict inflation targeting can lead to a unit root in the unemployment rate, but dual mandate monetary policy can stabilise the economy...

In the aftermath of the financial crisis, the role of monetary policy and macro-prudential regulation in promoting financial stability is under discussion. The old debate concerning whether monetary policy should respond to credit and asset price bubbles was revived, whereas macro-prudential...

We develop a general mandate framework for delegating monetary policy to an instrument-independent, but goal-dependent central bank (CB). The mandate consists of: (i) a simple quadratic loss function penalizing deviations from target macroeconomic variables; (ii) a Taylor-type nominal...