Bartolomeo, Giovanni Di; Rossi, Lorenzo; Tancioni, … - Dipartimento di Economia e Diritto, Facoltà di Economia - 2006
This paper develops a simple New Keynesian Dynamic Stochastic General Equilibrium (DSGE) model with rule-of-thumb consumers and external habits. Our theoretical model has a closed-form solution which allows the analytical derivation of its dynamical and stability properties. These properties are...