We develop a framework for analyzing "medium-runʺ departures from balanced growth, and apply it to the economies of continental Europe. A time-varying factor-augmenting production function (mimicking "directedʺ technical change) with a below-unitary substitution elasticity coupled with...

We develop a framework for analyzing quot;medium-runquot; departures from balanced growth, and apply it to the economies of continental Europe. A time-varying factor-augmenting production function (mimicking quot;directedquot; technical change) with a below-unitary substitution elasticity...

Using euro-area data, we re-examine the empirical success of New-Keynesian Phillips curves (NKPCs). We re-estimate with a suitably specified optimizing supply side (which attempts to treat non-stationarity in factor income shares and mark-ups) that allows us to derive estimates of technology...

Rational expectations has been the dominant way to model expectations, but the literature has quickly moved to a more realistic assumption of boundedly rational learning where agents are assumed to use only a limited set of information to form their expectations. A standard assumption is that...

The model presented here is a New estimated medium-scale Multi-Country Model (NMCM) which covers the five largest euro area countries and is used for forecasting and scenarios analysis at the European Central Bank. The model has a tight theoretical structure which allows for non-unitary...