This paper contributes to the research on the macroeconomic origins of conflict. Based on a sample of 133 low- and middle-income countries over a 30-year period, it analyses to what extent changes in a country's commodity terms-of-trade (ToT) can explain an increase in the incidence and...

The global food crisis remains a major challenge. Food insecurity fueled by widely experienced increases in the cost of living has become a growing concern especially in low-income countries, even if price pressures on global food markets have softened somewhat since the onset of Russia's war in...

In this paper, I study the optimal inflation rate in a sticky price economy in which workers are heterogeneous in labor productivity and wage changes are subject to asymmetric adjustment costs. The model calibrated to U.S. micro wage data implies downward nominal wage rigidity (DNWR). The...

I develop a New Keynesian model that embeds heterogeneous workers with asymmetric wage adjustment costs in order to address two inflation puzzles: missing deflation during the Great Recession and the subsequent missing inflation. When the wage adjustment costs are estimated according to U.S....

It is well known that there is a tension between the frequency and duration of the zero lower bound on the nominal interest rate (ZLB) and the determinacy of equilibrium. In this article, I show that the presence of downward nominal wage rigidity (DNWR) resolves the tension by preventing a...

In this paper, I examine the welfare consequences of conventional approximation methods in business cycle analysis: the log-linear approximation of model dynamics and the second-order approximation of social welfare. In a canonical New Keynesian model, the approximation around the deterministic...