In light of the recent financial and real economic crisis, it seems clear that macroeconomists need to better account for the influence of financial markets. This paper explores the consequences of treating the interaction between different financial markets, monetary policy, and the real...

In this paper are outlined some new-Keynesian economic models along with their micro foundations. At first small model of interest rate consumption income and savings has been outlined. Modigliani-Miller model follows as one of the five neutralities in macroeconomics, and demand for money by...

We investigate the desirability of adopting a rule in favor of discretionary monetary policy in a model exhibiting Kydland and Prescott's dynamic inconsistency problem but no fundamental incompatibility between the policymaker's price stability and full employment objectives. We show that if...