We investigate the behavior of asset prices in a typical New Keynesian macro model. Using a second-order approximation, we examine bond and equity returns, the equity risk premium, and the behavior of the real and nominal term structure. As documented in the literature, our results suggest that...

The expert contributors focus on global imbalances and accompanying policy challenges, competitiveness and trade, the sustainability of current growth strategies, and banking and financial stability in the light of the global economic and financial crisis. They provide a multi-disciplinary...

This paper looks at macroeconomic factors behind the current crisis. The first part looks at how global macroeconomic trends--including sustained strong growth, low real interest rates, and high saving rates--provided an environment conducive to increased financial risk-taking. The second part...