Many explanations for the decline in real interest rates over the last 30 years point to the role that population aging or rising income inequality plays in increasing the long-run aggregate demand for assets. Notwithstanding the importance of such factors, the starting point of this paper is to...

We build a tractable New Keynesian model to study four types of monetary and fiscal policy. We find that quantitative easing (QE), lump-sum fiscal transfers, and government spending have the same effects on the aggregate economy when fiscal policy is fully tax financed. Compared with these three...

This paper studies the impact government expenditure has on inflation by examining an augmented Phillips curve implied from a structural New Keynesian model, Our estimation results, based on external instruments, show that the augmented Phillips curve has a flatter slope than the canonical...