A number of authors have suggested that economies face a long-run inflation-unemployment trade-off due to downward nominal-wage rigidity. This theory has implications for the nature of the short-run Phillips curve when wage inflation is low. Akerlof, Dickens and Perry have developed an empirical model in which a variable (S) designed to capture the effect of downward nominal-wage rigidity is co...

A number of authors have suggested that economies face a long-run inflation-unemployment trade-off due to downward nominal-wage rigidity. This theory has implications for the nature of the short-run Phillips curve when wage inflation is low. Akerlof, Dickens and Perry have developed an empirical model in which a variable (S) designed to capture the effect of downward nominal-wage rigidity is co...

In this paper, we develop a bivariate unobserved components model for inflation and unemployment. The unobserved components are trend inflation and the non-accelerating inflation rate of unemployment (NAIRU). Our model also incorporates a time-varying Phillips curve and time-varying inflation persistence. What sets this paper apart from the existing literature is that we do not use unbounded ra...

We give a further elaboration of the fundamental connections between Lax-Phillips scattering, conservative input/state/output linear systems and Sz.-Nagy-Foias model theory for both the discreteand continuous-time settings. In particular, for the continuous-time setting, we show how to locate a scattering-conservative L2-well-posed linear system (in the sense of Staffans and Weiss) embedded in ...

We use the inflation premium—the difference between nominal and real interest rates—as a proxy for expected inflation in the context of the New Keynesian Phillips Curve. Using data from inflation-indexed and nominal bonds we estimate a forward-looking Phillips curve for the United Kingdom over the period 1985-2004. The proposed model describes UK inflation dynamics considerably better than does...

Many regions in the world are protected against flooding by a dike, which may be either natural or artificial. We deal with a model for finding the optimal heights of such a dike in the future. It minimizes the sum of the investments costs for upgrading the dike in the future and the expected costs due to flooding. The model is highly nonlinear, nonconvex, and infinite-dimensional. Despite this...