Monetary policy affects the degree of strategic complementarity in firms pricing decisions if it responds to the aggregate price level. In normal times, when monopolistic competitive firms increase their prices, the central bank raises interest rates, which lowers consumption demand and creates...

Monetary policy affects the degree of strategic complementarity in firms' pricing decisions if it responds to the aggregate price level. In normal times, when monopolistic competitive firms increase their prices, the central bank raises interest rates, which lowers consumption demand and creates...

This paper presents a simple Ramsey-type model example where two infinitely-living agents have same utility function except for time preference, and shows that equilibrium is indeterminate that is to be interpreted as being non-existent. The issues regarding New Keynesian transversality...

This paper aims at assessing the impact of inflation targeting on actual inflation when considering inflation perceptions together with interrelated inflation expectations, modifying the seminal papers of Barro and Gordon (1983a and 1983b). The modeling of inflation perceptions and of inflation...

This paper examines the ability of a policy maker to fashion equilibrium outcomes in an environment where market participants play a coordination game with heterogeneous information. We consider a simple model of regime change that embeds many applications examined in the literature. In...

This paper aims at assessing the impact of inflation targeting on actual inflation when considering inflation perceptions together with interrelated inflation expectations, modifying the seminal papers of Barro and Gordon (1983a and 1983b). The modeling of inflation perceptions and of inflation...

This paper studies bank competition with borrower adverse selection. In the model, expected non-performing loan costs are high when credit is granted in booms, when risk free rates are low, or when competition is strong. I prove that full competition is suboptimal due to this last effect; that...

We generalize a simple New Keynesian model and show that a flattening of the Phillips curve reduces the size of fiscal multipliers at the zero lower bound (ZLB) on the nominal interest rate. The factors behind the flatting are consistent with micro- and macroeconomic empirical evidence: it is a...