We evaluate the case for perfect price (inflation) stabilization in a New Keynesian (NNS) model that includes capital accumulation, a variety of shocks, a monetary and an imperfect competition distortion. In such a model, price rigidity may provide the monetary authorities with an opportunity to...

Recent empirical work has suggested that in response to a positive technology shock employment shows a "persistent decline". We show that the standard, open economy, flexible price model can generate a negative response of employment to a positive technology shock and can also match the negative...

Differential equations with advanced and delayed time arguments may arise in the optimality conditions of simple growth models with delays. Models with investment gestation lags (time-to-build), consumption gestation lags (habit formation) or learning by using lie in this category. In this...

Differential equations with advanced and delayed arguments arise in the optimality conditions of continuous time growth models with delays. In this paper, we use optimal control theory with delays, and we propose a shooting method to numerically deal with this class of models. We find that for a...

We develop a methodology that allows DSGE models to capture the empirical content of informational frictions while bypassing the computational challenges that come with conventional formalizations of such frictions. We apply this methodology in the context of an RBC model augmented with a type...

This paper assesses the quantitative impact of ambiguity on the historically observed financial asset returns and prices. The single agent, in a dynamic exchange economy, treats uncertainty about the conditional mean of the probability distribution on consumption and dividends in the next period...

This paper proposes the use of optimal grouping methods for determining the various age groups within a population. The cutoff ages for these groups, such as the age from wich an individual is considered to be an older person, are then endogenous variables that depend on the entire population...

Recent empirical work has suggested that in response to a positive technology shock, labour productivity rises more than output, while employment shows a persistent decline. This finding has raised doubts concerning the relevance of the RBC model as well as the quantitative significance of...