This paper presents and evaluates recent developments in the general equilibrium approach to business cycles. It discusses the foundations of the approach: the Friedman-Phelps natural rate hypothesis, intertemporal substitution and spatial distribution of markets. It also covers expectations and...

This paper analyses different types of models where contractual price rigidities lead to nonneutral effects of systematic monetary policy in a rational expectations environment. These non-market-clearing models differ by their basic structure and the specific choice of price and wage rules. The...

We develop, calibrate and simulate a model of the business cycle which encompasses several different classes of modern business cycle models. The model includes elements of endogenous growth, monopolistic competition in the goods market, and nominal rigidities due to non-contingent wage...

This paper first presents facts about the problem of high and persistent unemployment rates in many industrialized countries. It gives an overview and provides an evaluation of the different approaches to the problem of unemployment hysteresis. These approaches rely (1) on excessive real wages;...

This is a survey of the main business cycle models that have been developed since the early '80s. It emphasizes the incorporation of money in the neoclassical growth model. It argues that money contributes substantially to aggregate fluctuations only if nominal rigidities are introduced in the...

Criticizing the fact the Phillips curve wage and price equations are usually reduced form or quasi-reduced form equations without an explicit structural model behind, this article is an attempt to provide a supply side based structural model of the Phillips curve. Of special importance are the...