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Since Christopher Sims’s Macroeconomics and Realityʺ (1980), macroeconomists have used structural VARs, or vector autoregressions, for policy analysis. Constructing the impulseresponse functions and variance decompositions that are central to this literature requires factoring the...
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This paper studies the role of endogenous producer entry and product creation for monetary policy analysis and business cycle dynamics in a general equilibrium model with imperfect price adjustment. Optimal monetary policy stabilizes product prices, but lets the consumer price index vary to...
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Structural innovations in multivariate dynamic systems are typically hidden and often identified by means of a-priori economic reasoning. Under multivariate Gaussian model innovations there is no loss measure available to distinguish alternative orderings of variables or, put differently,...
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capitalistic economy. These cycles, inherent to the rise of innovation, are an unavoidable consequence of the way in which markets … played by finance in fostering innovation, in defining bank credit as the “monetary complement” of innovation. Nevertheless …, we feel that the connection between innovation and firm financing has seldom been examined from a theoretical standpoint …
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