Christiano, Lawrence J.; Trabandt, Mathias; Walentin, Karl - In: Journal of Economic Dynamics and Control 35 (2011) 12, pp. 1999-2041
Which are the main frictions and the driving forces of business cycle dynamics in an open economy? To answer this question we extend the standard new Keynesian model in three dimensions: we incorporate financing frictions for capital, employment frictions for labor and extend the model into a...