Before the war, the European economy was experiencing a heady recovery. The one-two punch of higher energy prices and trade disruptions, however, could destabilise EU firms already weakened by the pandemic, according to a new report published by the European Investment Bank. Simulations by the...

"Price rigidity is the key mechanism for propagating business cycles in traditional Keynesian theory. Yet the New Keynesian literature has failed to show that sticky prices by themselves can effectively propagate business cycles in general equilibrium. We show that price rigidity in fact can (by...

"This paper provides a simple dynamic optimization model of durable goods inventories. Closed-form solutions are derived in a general equilibrium environment with imperfect information and serially correlated shocks. The model is then applied to scrutinize some popular conjectures regarding the...