This paper studies fiscal policy in a New Keynesian DSGE model with endogenous technology growth in which scarring can occur endogenously through hysteresis effects in TFP. Both demand- and supply-driven recessions can weaken investment in R&D and technology adoption, thus depressing the...

Inflation targeting is strictly suboptimal when economic actors have incomplete information about the state of the economy. Nominal income targeting is approximately optimal, and exactly optimal under certain parameterizations. We derive this result in a “Lucas islands” monetary...

Dialogue on the effects of macroeconomic policies relative to the welfare of citizens has remained virtually unchanged since time immemorial. These economic policy discussions have had different dimensions, from subjective to objective welfare. As a contribution to literature, this paper...

The purpose of this paper is to present an approach with regard to the dynamic process of the general equilibrium during the business cycle fluctuations following monetary and fiscal interventions, which, I think, could contribute to bridging the differences between the different schools of...

Models dealing with monetary policy are generally based on microfoundations that characterize the behaviour of representative agents (households and firms). To explain the representative consumer behaviour, it is generally assumed a utility function in which the intertemporal elasticity of...

Through a comparative dynamic analysis, we argue that the reality of public debt issuance, which responds flexibly to business cycles in contrast to the EU’s institutionally prescribed fiscal discipline, may contribute to macroeconomic stabilization. Through a simple econometric analysis, we...