To analyse the most important aspects of the Secular Stagnation hypothesis, this paper considers the effects of hysteresis in potential output in a New-Keynesian model that is extended with endogenous potential output. To do so, a number of simulations of relevant scenarios is undertaken. It is...

This paper develops a small New Keynesian model with capital accumulation and government debt dynamics. The paper discusses the design of simple monetary and fiscal policy rules consistent with determinate equilibrium dynamics in the absence of Ricardian equivalence. Under this assumption,...

There has been a wealth of recent work deriving optimal monetary policy utilising New Neo-Classical Synthesis (NNCS) models based on nominal inertia. Such models typically abstract from the impact of monetary policy on the government's finances, by assuming that consumers are infinitely-lived...