We study the cyclical properties of sales, regular price changes and average prices paid by consumers ("effective" prices) using data on prices and quantities sold for numerous retailers across many U.S. metropolitan areas. Inflation in the effective prices paid by consumers declines...

We document a strong asymmetry in the evolution of federal funds rate expectations and map this observed asymmetry into measures of monetary policy uncertainty. We show that periods of monetary policy tightening and easing are distinctly related to downside (policy rate is higher than expected)...

I describe nine implications of the interconnectedness of fiscal and monetary policy that surface in Heterogeneous Agent New Keynesian (HANK) models. Not all are unique to HANK models. (i) Long run fiscal changes force monetary adjustments. (ii) Sustainable permanent deficits are feasible. (iii)...

Irving Fisher's encounter with the Quantity theory of Money began in the 1890s, during the debate about bimetallism, and reached its high point in 1911 with the publication of The Purchasing Power of Money. His most important refinement of the theory, derived from his recognition of bank...

Macroeconomic and microeconomic data paint conflicting pictures of price behavior. Macroeconomic data suggest that inflation is inertial. Microeconomic data indicate that firms change prices frequently. We formulate and estimate a model which resolves this apparent micro - macro conflict. Our...

This paper presents a synthesis of capital theory and business cycle analysis. Capital is the neglected child of macroeconomics. Despite its obvious importance, capital has not received the attention that it deserves in modeling the business cycle. While many business cycle models pay no or very...

We investigate the implications of a scarcity of safe assets in a framework in which the safety of an asset is an equilibrium outcome. The intrinsic characteristics and supply of the assets determine their liquidity properties and degree of safeness. The equilibrium can be inefficient even if...

Despite ultra-easy monetary policy in US, Eurozone and Japan, lending interest rate remains higher than expected profitability. However minimal lending interest rate in advanced economies diminishes the Central Banks' ability to stimulate economic growth. Paper argues that high interest rate is...

Using a new survey of European households, we study how exogenous variation in the macroeconomic uncertainty perceived by households affects their spending decisions. We use randomized information treatments that provide different types of information about the first and/or second moments of...

Using a new survey of European households, we study how exogenous variation in the macroeconomic uncertainty perceived by households affects their spending decisions. We use randomized information treatments that provide different types of information about the first and/or second moments of...