exported primary commodities, imported capital goods and intermediate inputs, and a financial shock, modeled as fluctuations in …

frictions, they are by no means enough to account for the observed economic fluctuations. Investment wedges play a major role …

emphasis on an inflation (output) target that destabilizes output (inflation). As demand shock variability increases, there is … a broader range for the policy rule weights to be IOCS. However, we also find that supply shock variability has the … opposite effect: Larger supply shock variances reduce the feasible policy rule weight range that achieve IOCS. Our results …

money demand falls, while a positive goods productivity shock raises temporary output and velocity. The paper explains such … important for velocity during less stable times and the goods productivity shock more important during stable times. -- business …

investment wedge as a tax on investment is equivalent to representing this wedge as a tax on capital income as long as the … underlying probability distributions over the investment wedge are different in the two representations. Even so, the …