The Federal Reserve has a dual mandate to foster both full employment and price stability. Most often these two goals are in alignment, so policies that support one objective generally support the other. However, at times the two aims can be at odds. When that happens, policies that target one...

We provide new evidence that models of the monetary transmission mechanism should be consistent with at least the following facts. After a contractionary monetary policy shock, the aggregate price level responds very little, aggregate output falls, interest rates initially rise, real wages...

This paper examines the ability of a simple stylized general equilibrium model that incorporates nominal wage rigidity to explain the magnitude and persistence of the Great Depression in the United States. The impulses to our analysis are money supply shocks. The Taylor contracts model is...