In a basic New Keynesian DSGE model with involuntary unemployment and inflation target shocks, we study the role of labor markets in the transmission of persistent monetary policy shocks that increase households' inflation expectations. The model predicts that labor market conditions can play...

We present new empirical evidence on monetary transmission by incorporating two types of shocks -- a standard temporary interest rate shock and a persistent inflation target shock. In an estimated DSGE model under imperfect information, where agents may be unable to distinguish these shocks, we...

We present empirical evidence on monetary transmission from estimated New Keynesian and empirical VAR models, that allow for a standard nominal interest rate shock and an inflation target shock. In response to the highly persistent inflation target shock we largely find evidence of a Neo-Fisher...

This paper sets to explain negative interest rates in a general equilibrium setup with financial intermediation that (i) helps circumvent constraints to timely access funds; (ii) brings funds to the capital market; and (iii) provides maturity transformation. Key implications of the model are...