Psychological factors are commonly believed to play a role on cyclical economic fluctuations, but they are typically omitted from state-of-the-art macroeconomic models. This paper introduces "sentiment" in a medium-scale DSGE model of the U.S. economy and tests the empirical contribution of...

With the increased international financial integration in recent years, bilateral financial linkages between countries may have a growing influence on their real economies. This paper employs a structural two-country New Keynesian model, which incorporates a cross-border wealth channel, to...

Recent papers have argued that one implication of globalization is that domestic inflation rates may have now become more a function of "global", rather than domestic, economic conditions, as postulated by closed-economy Phillips curves. This paper aims to assess the empirical importance of...

Background: The debate on US healthcare reform has largely focused on the introduction of a public health plan option. While supporters stress various beneficial effects that would arise from increased competition in the health insurance market, opponents often contend that a public plan would...

"This paper tests various political business cycle theories in a New Keynesian model with a monetary and fiscal policy mix. All the policy coefficients, the target levels of inflation and the budget deficit, the firms' frequency of price setting, and the standard deviations of the structural...

The results reveal the market expectation of a negative effect of the public option on the value of health insurance companies. The magnitude of the effect suggests a downward adjustment in the expected profits of health insurers of around 13%, but it does not support more calamitous scenarios. </AbstractSection>...

This paper presents a DSGE model in which agents׳ learning about the economy can endogenously generate time-varying macroeconomic volatility. Economic agents use simple models to form expectations and need to learn the relevant parameters. Their gain coefficient is endogenous and is adjusted...

This paper estimates a structural New Keynesian model to test whether globalization has changed the behavior of U.S. macroeconomic variables. Several key coefficients in the model–such as the slopes of the Phillips and IS curves, the sensitivities of domestic inflation and output to...

Psychological factors are commonly believed to play a role on cyclical economic fluctuations, but they are typically omitted from state-of-the-art macroeconomic models. This paper introduces “sentiment†in a medium-scale DSGE model of the U.S. economy and tests the empirical...

A recent notable development in the empirical macroeconomics literature has been the rapid growth of papers that build structural models, which include a number of frictions and shocks, and which are confronted with the data using sophisticated full-information econometric approaches, often...