This paper offers a reappraisal of the inflation-unemployment tradeoff, based on ?frictional growth,? describing the interplay between nominal frictions and money growth. When the money supply grows in the presence of price inertia (due to staggered wage contracts with time discounting), the...

Appropriate policies to address the problem of toxic assets should act as automatic stabilizers, so that institutions who toxic assets turn out to be worthless receive more public support than institutions whose toxic assets have value. Furthermore, such policies should be frugal in their...