Motivated by issues raised in both the finance and economics literatures, I construct a dynamic general equilibrium model where agents use differing degrees of sophistication when forecasting future economic conditions. All agents solve standard dynamic optimization problems and face strategic...

The role of unanticipated changes in money growth for aggregate fluctuations is reexamined using the methods of quantitative equilibrium business cycle theory. A stochastic growth model with money is constructed that has the feature, following Lucas (1972, 1975), that production and trade take...

This paper points out an empirical failing of real business cycle models in which unemployment is endogenized through a matching function. One can easily choose a calibration to make the cyclical fluctuation in unemployment as large in the model as it is in the data, or to make the response of...

RBC-Modelle sind ein wichtiger Bestandteil der makroökonomischen Theorie. In diesem Modellrahmen werden die Wirkungen von fiskalpolitischen Maßnahmen analysiert, die Modellmechanismen erklärt und verschiedene Politikmaßnahmen anhand der Output- und Nutzeneffekte beurteilt. Es zeigt sich...

Recent work on the effects of permanent technology shocks argue that the basic RBC model cannot account for a negative correlation between hours worked and labor productivity. In this paper, I show that this conjecture is not necessarily correct. In the basic RBC model, I find that hours worked...

This paper puts forward a systematic approach to teaching simple dynamic stochastic general equilibrium (DSGE) models to undergraduates. It proceeds in the following way: first, the structural model of the economy, which includes the households' and firms' problems, is presented and...