Simple models of monetary policy often imply optimal policy behavior that is considerably more aggressive than what is commonly observed. This paper argues that such counterfactual implications are due to model restrictions and a failure to account for multiplicative parameter uncertainty,...

This paper develops a New Keynesian model with on the job search. Workers are allowed to search on the job in order to find a better job. I analyze how output, consumption, inflation, unemployment, and the other labor market variables respond to productivity and monetary policy shocks. I allow...

This paper studies the dynamic response of a few key macroeconomic variables to each one of three exogenous shocks: monetary, government spending and technological shocks. By using a cash in advance model with two market frictions, one in the intermediation of loanable funds, and one in the...

I propose a new approach to identify exogenous monetary policy shocks that requires no priors on the underlying macroeconomic structure, nor any observation of monetary policy actions. My approach entails directly estimating the unexpected changes in the federal funds rate as those which cannot...

Does it matter what the central bank had said during a monetary policy announcement? The paper proposes a new approach to identifying the effects of forward guidance taking into account what the central bank had said and how financial markets perceived it. I use computational linguistic methods...

The study proposes a novel way to identify the effects of monetary policy shocks taking into account time-varying signals of the central bank. I augment the standard monetary policy Bayesian Vector Autoregression (BVAR) with additional information variables from Fed statements, which allows us...

Despite a large literature documenting that the efficacy of monetary policy depends on how inflation expectations are anchored, many monetary policy models assume: (1) the inflation target of monetary policy is constant; and, (2) the inflation target is known by all economic agents. This paper...

This paper presents a model in which price setting firms decide what to pay attention to, subject to a constraint on information flow. When diosyncratic conditions are more variable or more important than aggregate conditions, firms pay more attention to idiosyncratic conditions than to...