Asada, Toichiro; Chen, Pu; Chiarella, Carl; Flaschel, Peter - 2005
We reformulate and extend the standard AS-AD growth model of the Neoclassical Synthesis (stage I) with its traditional … microfoundations. The model retains an LM curve in the place of a Taylor interest rate rule, exhibits sticky wages as well as sticky … investment and the inflation climate in which the economy is operating. The resulting nonlinear 5D model of labor and goods …