In this paper, several flaws of the basic no-capital/labor-only New Keynesian model are discussed. Some flaws were left undiscovered because mass of varieties n in Dixit-Stiglitz aggregator is often considered as not affecting overall outcomes. Only when n=1 would ordinary results of the basic...

This paper points out a simple but important “money” issue in New Keynesian models. Once central bank-controlled bonds are included as part of the household budget constraint, New Keynesian models can no longer be considered in money-less framework, if we think of economic logic of the...

This paper presents a re-interpretation of a New Keynesian model with capital, where zero long-run output gap restriction is eliminated and a certain type of assumption regarding risk-less nominal interest rate is adopted