The subprime loan mortgage crisis has revived scholarly interest in Minsky's financial instability hypothesis. The related mathematical models present two types of Minskian financial structures. We construct macrodynamic models that consider both structures and discuss financial instability and...

This paper analyzes conditions for determinacy in a new Keynesian model with endogenous growth. Endogenous growth shrinks the determinacy region considerably. Complying with the Taylor principle is not sufficient for determinacy, which decreases in the spillovers from actual on potential output....

During the last 25 years, the stock market in the US has been strongly pro-cyclical in the presence of a counter-cyclical monetary policy. In this paper, we use an endogenous business cycle model to explore the factors contributing to a pro-cyclical stock market. A dynamic expectation structure...

During the last 25 years, the stock market in the US has been strongly pro-cyclical in the presence of a counter-cyclical monetary policy. In this paper, we use an endogenous business cycle model to explore the factors contributing to a pro-cyclical stock market. A dynamic expectation structure...

There is no such thing as a 'real' economy. The task, therefore, is to consistently reconstruct the fluctuations of employment and output from the interactions of real and nominal variables. The present paper does exactly this. No nonempirical concepts like utility, equilibrium, rationality,...

This paper examines the effectiveness of inflation targeting to stabilize the real economy of the advanced countries where inflation targeting was adopted in the early 1990s. This paper employs the monetary business cycle accounting methodology recently developed by Šustek (2011) which is an...

Structural models are a powerful tool for business cycle and monetary policy analysis because they are invariant to either policy changes or external shocks. In this paper, we derive a Sidrauski-type model in which both the demand and supply side are structural in the sense that the behavioral...

We argue that Schularick and Taylor's (2012) comparison of credit growth and monetary growth as financial-crisis predictors does not necessarily provide a valid basis for achieving one of their stated intentions: evaluating the relative merits of the "money view" and "credit view" as accounts of...

This paper estimates and compares four versions of the New Keynesian model with nominal rigidities using a Bayesian approach. Our empirical results are as follows. First, the authors find that adding price indexation improves the fit of Calvo's (1983) model. Second, models with both staggered...