Empirical Assessment of Bifurcation Regions within New Keynesian Models

New Keynesian Optimal-Policy Models: An Empirical Assessment

This paper estimates two optimization-based sticky-price New Keynesian models and assesses how well they describe US output, inflation, and interest rate dynamics. We consider models in which either internal habit formation or external habit formation influence consumption behavior, and in which Calvopricing and inflation indexation generate price and inflation inertia. Subject to constraints d...

An empirical evaluation of three post Keynesian models

Structuralist and post Keynesian models differ in their assumptions about firms’ investment behavior and pricing/output decisions. This paper compares three benchmark models: Kaleckian, Robinsonian and Kaldorian. We analyze the implications of these models for the steady growth path and the cyclical properties of the economy, and evaluate the consistency of the theoretical predictions with empi...

Can learnability save new-Keynesian models?

Bennett McCallum (2009), applying Evans and Honkapohja’s (2001) results, argues that “learnability” can save New-Keynesian models from their indeterminacies. He claims the unique bounded equilibrium is learnable, and the explosive equilibria are not. However, he assumes that agents can directly observe the monetary policy shock. Reversing this assumption, I find the opposite result: the bounded...

Interest Rate Pegs in New Keynesian Models∗

The conventional policy perspective is that lowering the interest rate increases output and inflation in the short run, while maintaining inflation at a higher level requires a higher interest rate in the long run. In contrast it has been argued that a Neo-Fisherian policy of setting an interest-rate peg at a fixed higher level will increase the inflation rate. We show that adaptive learning ar...

Keynesian Models of Unemployment