We show how to formulate and solve the new Keynesian model in continuous time. In our economy, monopolistic firms engage in infrequent price setting á la Calvo. We introduce shocks for preferences, total factor productivity and government expenditure, and then show how the equilibrium system...

There prevails a view that the monetary policy in the Euro area has changed, especially after the European Monetary System (EMS) came into operation in 1979. The goal of this paper is to quantify (1) the extent to which policy regime has changed and (2) the counterfactual effects of such regimes...

This paper illustrates how to perform likelihood-based inference in dynamic stochastic general equilibrium (DSGE) models with Epstein-Zin preferences. This class of preferences has recently become a popular device to account for asset pricing observations and other phenomena that are challenging...

Parents socialize their children about many things, including sex. Socialization is costly. It uses scare resources, such as time and effort. Parents weigh the marginal gains from socialization against its costs. Parents at the lower end of the social-economic scale indoctrinate their daughters...

and a notable change in the current account of the economy.