This paper studies the application of the simulated method of moments (SMM) to the estimation of nonlinear dynamic stochastic general equilibrium (DSGE) models. Monte-Carlo analysis is employed to examine the small-sample properties of SMM in specifications with different curvatures and...

Durable goods pose a challenge for standard sticky-price models because the near constancy of their shadow value and their apparent price flexibility lead to perverse and counterfactual economic implications, such as the tendency of the durables and nondurables sectors to move in opposite...

Monetary policy in an economy with both downwardly rigid wages and a transaction motive for money demand is studied using a dynamic stochastic general equilibrium model. The two key features of the model imply that both Tobin's “inflation grease” argument and Friedman's rule are operative,...