We relax the assumption of full information that underlies most dynamic general equilibrium models, and instead assume agents optimally form estimates of the states from an incomplete information set. We derive a version of the Kalman filter that is endogenous to agents' optimising decisions,...

Using a standard dynamic general equilibrium model, we show that the interaction of staggered nominal contracts with hyperbolic discounting leads to inflation having significant long-run effects on real variables

How is the impact of monetary policy affected by the nature of nominal debt contracts? How does this change if the interest payments on the debt are fixed or floating? To address these questions, we add a model of financial institutions' behaviour to a dynamic general equilibrium model in which...

Adding variable capital utilisation to a dynamic new Keynesian (DNK) framework gives a model which can produce realistic responses to both technology and monetary shocks. This requires the assumption of a much lower level of nominal rigidity than is usual

The permanent income hypothesis means that dynamic general equilibrium models fail to produce a hump-shaped response for consumption even if they do so for other variables. This article shows that the introduction of non-separable preferences and unemployment can solve this problem

Using a standard dynamic general equilibrium model, we show that the interaction of staggered nominal contracts with hyperbolic discounting leads to inflation having significant long-run effects on real variables

This paper shows that the interaction between money growth and staggered nominal contracts gives rise to a long-run inflation-unemployment tradeoff.

Using a standard dynamic general equilibrium model, we show that the interaction of staggered nominal contracts with hyperbolic discounting leads to inflation having significant long-run effects on real variables.