Sudden and protracted oil-price increases are generally accompanied by economic contractions and high inflation. How should monetary policy react to oil-price shocks in order to minimize such adverse macroeconomic effects? We build a DSGE model characterized by two oil-importing countries and...

We reconsider the macroeconomic effects of fiscal policy in the context of a new-keynesian dynamic stochastic general equilibrium model. We assume that a fraction of the agents are non Ricardian and estimate the model parameters using Bayesian techniques. Our results show that the estimates of...

The natural rate of interest -- the real interest rate consistent with output equaling potential -- plays an important role in both economic forecasting and monetary policy. Much of the literature has assumed that the natural rate of interest is constant. For example, the Taylor rule includes a...