A firm that faces insufficient supply of labor can either increase the wage offer to attract more applicants, or reduce the hiring standard to enlarge the pool of potential employees, or do both. This simultaneous adjustment of wages and hiring standards has been emphasized in a classical...

Using a multi-country general equilibrium model, we demonstrate that when agents face credit constraints in an international financial market, rational expectations, which are ex-post heterogeneous between countries, cause business fluctuations. If the international financial market becomes...

Abstract Starting from some of the most recent literature developed after the world financial crisis, it has been developed a model with heterogeneous agents and an active interbank market, characterized by an endogenous default probability. The key feature of the analysis is that the...

This paper represents shortly the contribution of the Professor Lucas in modern macroeconomics, notably famous criticism of the Keynesian models. Contribution which was worth him the Nobel prize of economy 1995.

Models in macroeconomic sciences are designed with the aim of understanding and then simulating the real world economic and monetary policy making. There has been a considerable debate over how to model the real world economic phenomena, and how correctly those models allow explanations of...

We present and analyze a local interaction model where agents play a bilateral prisoner's dilemma game with their neighbors. Agents learn about behavior through payoff-biased imitation of their interaction neighbors (and possibly some agents beyond this set). We find that the [Eshel, I., L....

The paper develops an AK endogenous growth model with an endogenously determined rate of intertemporal preference. Following some of the related literature, we assume that the degree of impatience that is revealed by the representative agent, regarding future consumption, depends on income. To...

Abstract The utilization of a real-interest rate rule in Romer’s new-Keynesian IS-MP approach, which is consistent with new synthesis intertemporal baseline macroeconomic models, provides a contemporary alternative to the standard old-Keynesian IS-LM model and moves back the emphasis on...

An important topic in recent macroeconomic literature is the potential effects of noise, or expectational, shocks on aggregates. Most of the past analysis has used some derivative of a New Keynesian model with labor as the only input, but doing so fails to consider that some input decisions may...

In this paper, we empirically examine a heterogenous bounded rationality version of a hybrid New-Keynesian model. The model is estimated via the simulated method of moments using Euro Area data from 1975Q1 to 2009Q4. It is generally assumed that agents' beliefs display waves of optimism and...