This paper presents a theory of the productivity slowdown based on the effects that uncertainty has on the productivity of specialized capital. Uncertainty reduces the efficiency of inflexible capital and generates a slowdown. It also increases the demand for flexible capital which retains its...

Macroeconomic shocks such as wil price increases induce a systematic (endogenous) response of monetary policy. We develop a VAR-based technique for decomposing the total economic effects of a given exogenous shock into the portion attributable directly to the shock and the part arising from the...

In this paper, we characterize conditions under which interest rate feedback rules wherby the nominal interest rate is set as an increasing function of the inflation rate generate multiple equilibria. We show that these conditions depend not only on the fiscal regime (as emphasized in the fiscal...