This paper compares alternative methods for approximating and solving the stochastic growth model with parameterized expectations. We compare polynomial and neural netowork specifications for expectations, and we employ both genetic algorithm and gradient-descent methods for solving the...

This paper compares three approximation methods for solving and simulating real business cycle models: linear quadratic (including log- linear quadratic) methods, the method of parameterized expectations, and the genetic algorithm. Linear quadratic (LQ), log-linear quadratic (log- LQ) and...

This paper is a simulation analysis of the stochastic growth model with heterogeneous agents. The environment is one of two agents, with a common technology for production, individual labor endowment shocks, constant relative risk aversion utility functions, and limited borrowing/lending...

In this paper we investigate the dynamics of Hong Kong cap-floor volatilities and compare their dynamics with the US cap-floor volatilities. We use linear and non-linear factor models and VAR¡¦s. The results show that the first principal components, both linear and non-linear, do a very good...

This paper compares the effects of pro and counter-cyclical government spending on income inequality and welfare in a small open economy. We examine the consequences of alternative government spending rules following shocks to productivity, domestic interest rates, terms of trade and export...

This paper examines how membership of a monetary union affects macroeconomic adjustment of Euro Area countries to sudden stops.We focus on a key difference between a standard peg and a monetary union: the availability of external financing from the common centralbank via the TARGET system. For...

In this article, we analyse the conduct of optimal monetary policy for the new euro area. The aggregate euro area economy is modelled to have relatively sluggish adjustment properties and a private sector with mainly backward-looking expectations. In this economy, we assume that the central bank...

Using euro-area data, we re-examine the empirical success of New Keynesian Phillips Curves (NKPCs). The nature of our re-evaluation relies on the actual empirical underpinnings of such estimates: we find existing estimates un-robust and - given that key parameters are generally calibrated rather...