The paper evaluates the implications of the Smets and Wouters (2004) DSGE model for the US yield curve. Bond prices are modelled in a way that is consistent with the macro model and the resulting risk premium in long term bonds is a function of the macro model parameters exclusively. When the...

Endogenous labor supply is introduced into a stochastic growth model. Money is superneutral, and the real part of the equilibrium can be characterized by two nonlinear trade-off loci between the time devoted to leisure and the mean growth rate that ensure the following: (i) equality among the...

The paper evaluates the implications of the Smets and Wouters (2004) DSGE model for the US yield curve. Bond prices are modelled in a way that is consistent with the macro model and the resulting risk premium in long term bonds is a function of the macro model parameters exclusively. When the...