This study analyzes a two-country dynamic general equilibrium model with nominal rigidities, monopolisticcompetition and producer currency pricing. A quadratic approximation to the utility of the consumers is derivedand assumed as the policy objective function of the policymakers. It is shown...

This paper provides first and second-order approximation methods for the solution of nonlinear dynamic stochastic models in which the exogenous state variables follow conditionally-linear stochastic processes displaying time-varying risk. The first-order approximation is consistent with a...