Inflation is a fundamental category within an economy. Mainstream economists claim that its rate cannot be high nor too low, because it harms the economy. This is why today the basic aim of central banks is the maintenance of the increase of consumer prices on a low level. The main aim of the...

This paper argues that limited asset market participation is crucial in explaining U.S. macroeconomic performance and monetary policy before the 1980s, and their changes thereafter. We develop an otherwise standard sticky-price DSGE model, whereby at low enough asset market participation,...

The unemployment rate in Australia is modelled as an assymmetric and non-linear function of aggregate demand, productivity, real wages and unemployment benefits. Negative changes in aggregate demand cause the unemployment rate to rise rapidly, while real wage rigidity contributes its to slow...

Inflation is a fundamental category within an economy. Mainstream economists claim that its rate cannot be high nor too low, because it harms the economy. This is why today the basic aim of central banks is the maintenance of the increase of consumer prices on a low level. The main aim of the...

We show that an otherwise standard one-sector real business cycle model with variable capital utilization and mild increasing returns-to-scale is able to generate qualitatively as well as quantitatively realistic aggregate fluctuations driven by news shocks to future consumption demand. In sharp...

This paper incorporates limited asset markets participation in dynamic general equilibrium and develops a simple analytical framework for monetary policy analysis. Aggregate dynamics and stability properties of an otherwise standard business cycle model depend nonlinearly on the degree of asset...