Recently, increasing attention is being devoted to interest rate rules that respond directly to economic forecasts rather than relying on current and past observations. Empirical studies suggest this 'forward-looking' rule provides a reasonable description of recent monetary policy in several...

We formulate an optimizing-agent model in which both labor and product markets exhibit monopolistic competition and staggered nominal contracts. We demonstrate that the household's unconditional expected utility can be expressed in terms of the unconditional variances of the outgap gap,...

Most general equilibrium models calculate welfare gains from international risk sharing based on a loglinear approximation. They have reported welfare gains ranging from zero to one percent of permanent consumption. Some simulation results -- Tesar (1995), van Wincoop (1997), and Kim (1997) --...