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is two. We also show that dimension two is generated by a real and nominal shock, with output mainly driven by the real … shock and inflation by the nominal shock. The implication is that, by tracking any forecastable measure of real activity and …
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We introduce endogenous growth in an otherwise standard NK model with staggered prices and wages. Some results follow: (i) monetary volatility negatively affects long-run growth; (ii) the relation between nominal volatility and growth depends on the persistence of the nominal shocks and on the...
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