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equation of a linear quadratic regulator. The existing theory by Hansen and Sargent (2007) refers to an additional Sylvester …
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This paper compares the welfare effects of anticipated and unanticipated cost-push shocks in the canonical New Keynesian model with optimal monetary policy. We find that, for empirically plausible degrees of nominal rigidity, the anticipation of a future cost-push shock leads to a higher welfare...
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This paper compares the welfare effects of anticipated and unanticipated cost-push shocks within the canonical New Keynesian model with optimal monetary policy. We find that, for empirically plausible degrees of nominal rigidity, the anticipation of a future cost-push shock leads to a higher...
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redistribution of wealth between households and the government, between nationals and foreigners, and between households within the … price level increase is matched by the gains of the government. Even though this redistribution is zero-sum, we observe …-linear effects on work effort of the redistribution of wealth across households. Finally, the direction of the change in the weighted …
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