We propose a macroeconomic model with a nonlinear Phillips curve that has a flat slope when inflationary pressures are subdued and steepens when inflationary pressures are elevated. The nonlinear Phillips curve in our model arises due to a quasi-kinked demand schedule for goods produced by...

We augment a standard New Keynesian model with a financial accelerator mechanism and show that financial frictions generate large state-dependent amplification effects. We fit the model to US data and show that, when shocks drive the model far away from the steady state, the nonlinear model...

We augment a standard New Keynesian model with a financial accelerator mechanism and show that financial frictions generate large state-dependent amplification effects. We fit the model to US data and show that, when shocks drive the model far away from the steady state, the nonlinear model...

This study provides empirical evidence that the costs of austerity crucially depend on the level of private indebtedness. In particular, fiscal consolidations lead to severe contractions when implemented in high private debt states. Contrary, fiscal consolidations have no significant effect on...

Recent studies have proposed several factors that determine how fiscal consolidations affect the economy. This Roundup focuses on several of these determinants. Namely, it discusses how the composition of the consolidation measure, the state of the business cycle, the level of private...

Massive Konsolidierungen der öffentlichen Haushalte sowie die Umsetzung von Strukturreformen sollten den südeuropäischen Ländern aus der Krise helfen. Doch neuesten Untersuchungen zufolge könnte die auferlegte strikte Austeritätspolitik im Zusammenspiel mit den niedrigen Zinsen im Euroraum...