A Simple, Microfounded Lucas Island Model

Evolution of Social Networks: A Microfounded Model

Many societies are organized in networks. Realworld social networks such as friendship networks, online social networks, scientific collaboration and citation networks, are formed by people who meet and interact over time. The way people meet is highly influenced by the evolving network structure, and their decisions to connect depend mainly on their intrinsic characteristics. In this paper, we...

Robustly Optimal Monetary Policy in a Microfounded New Keynesian Model

We consider optimal monetary stabilization policy in a New Keynesian model with explicit microfoundations, when the central bank recognizes that private-sector expectations need not be precisely model-consistent, and wishes to choose a policy that will be as good as possible in the case of any beliefs close enough to model-consistency. We show how to characterize robustly optimal policy without...

A Microfounded Model of Chinese Capital Account Liberalisation

In shaping the evolution of the global financial system in the decade ahead, few events will likely be more significant than capital account liberalisation in China and the internationalisation of the renminbi. This paper provides a theory-based enquiry into the contours of China’s international balance sheets after the renminibi becomes convertible under the capital account. We construct a two...

The Lucas Growth Model

Robustly Optimal Monetary Policy in a Microfounded

We consider optimal monetary stabilization policy in a New Keynesian model with explicit microfoundations, when the central bank recognizes that private-sector expectations need not be precisely model-consistent, and wishes to choose a policy that will be as good as possible in the case of any beliefs close enough to model-consistency. We show how to characterize robustly optimal policy without...