This paper aims to select the best model or set of models for modelling volatility of the four most popular …

probability of macroeconomic catastrophes à la Barro (2006), and to the case of an uncertain trend or volatility of growth à la …

We present a new partial equilibrium theory of price adjustment, based on consumer loss aversion. In line with prospect … theory, the consumers’ perceived utility losses from price increases are weighted more heavily than the perceived utility … an otherwise standard dynamic neoclassical model of monopolistic competition. The resulting theory of price adjustment is …

. Volatility is shown to depend on the speed of convergence of the cyclical component, the expected length of a cycle and on the … volatility. With exogenous sources of fluctuations, a special case of our model, decentralized factor allocation is efficient …-) stabilize the economy. No unambiguous link exists between volatility and welfare …

/Dollar exchange rate return. In line with theory, the impact of spot market intervention is strikingly similar to that achieved …