The paper considers three methods for eliminating the zero lower bound on nominal interest rates and thus for restoring symmetry to domain over which the central bank can vary its policy rate. They are: (1) abolishing currency (which would also be a useful crime-fighting measure); (2) paying...

The volatility of US business cycle has declined during the last two decades. During the same period the financial structure of firms has become more volatile. In this paper we develop a model in which financial factors play a key role in generating economic fluctuations. Innovations in...

In this paper I review the contribution of real business cycles models to our understanding of economic fluctuations, and discuss open issues in business cycle research.

This paper considers the ultimate causes of post-war UK business cycles. Using an extended stochastic growth model we construct estimates of a productivity and preference shock both of which are highly persistent, volatile and potentially capable of explaining UK business cycles. We find the...

Understanding the features and the determinants of individual price setting behaviour is important for the formulation of monetary policy. These behavioural mechanisms play a fundamental role in influencing the characteristics of aggregate inflation and in determining how monetary policy affects...

The dynamic stochastic general equilibrium (DSGE) models that are used to study business cycles typically assume that exogenous disturbances are independent autoregressions of order one. This paper relaxes this tight and arbitrary restriction, by allowing for disturbances that have a rich...

"Macroeconomics without the LM curve" has begun to move advanced undergraduate closed economy macroeconomics teaching models away from the IS/LM approach to simple versions of the New Keynesian models taught in graduate courses and used in central banks. But the equally traditional and...

In this paper we develop a stochastic dynamic general equilibrium model of the Greek economy, in the real business cycle modelling tradition. Household preferences depend on private and public consumption and leisure. Government finances its investment, consumption and transfer payments by means...

This paper studies the evolution of monetary policy targets over the course of the past 200 years. We argue that policy targets are set as part of an assignment procedure that is intended to address both time consistency and monitoring problems. As a result, central banks, after having been...

This lecture is about how best to evaluate economic theories in macroeconomics and finance, and the lessons that can be learned from the past use and misuse of evidence. It is argued that all macro/finance models are `false' so should not be judged solely on the realism of their assumptions. The...