With an estimated New Keynesian model, this paper compares the “great recession” of 2007-09 to its two immediate predecessors in 1990-91 and 2001. The model attributes all three downturns to a similar mix of aggregate demand and supply disturbances. The most recent series of adverse shocks lasted longer and became more severe, however, prolonging and deepening the great recession. In addition, ...

This paper adopts a New Keynesian approach to analyze the relationship between nominal interest rates and prices. In this new framework, both a positive relation between interest rates and price levels (i.e., a positive Gibson effect) and a negative relation between interest rates and subsequent price changes (i.e., a negative Fama-Fisher effect) arise when money is supplied inelastically and p...

In this paper, several flaws of the basic no-capital/labor-only New Keynesian model, as in Gaĺı (2008), are discussed. Some flaws were left undiscovered because mass of varieties n in Dixit-Stiglitz aggregator is often considered as not affecting overall outcomes. Only when n = 1 would ordinary results of the basic New Keynesian model hold. To save the theory, we consider the case where product...

In a New-Keynesian sticky-price model, we study how the gains from commitments depend on their horizon and credibility. Continuously committing just one period ahead captures all the gains available for any strictly positive level of credibility, unless policymakers themselves exclude deviations, in which case a relatively high credibility is required just to capture the majority of these. The ...

This year will be the eightieth anniversary of the publication of the General Theory. It will also be seventy years since the death of John Maynard Keynes and I am sure that new volumes will appear to add new interpretations or develop ideas derived from the book that radically changed economics and policy making. This year will also mark twenty years since the death of Hyman Minsky, who analyz...

A three-dimensional real nonlinear autonomous system of a concrete type is studied. The Hopf bifurcation is analyzed and the existence of a limit cycle is proved. A positively invariant set, which is globally attractive, is found using a suitable Lyapunov-like function. Corollaries for a cubic system are presented. Also, a two-dimensional nonlinear system is studied as a restricted system. An a...

The Washington Consensus, through which neoliberal global capitalist governance gained hegemony over the third world, entered a crisis in the late 1990s. Triggered by the 1997 Asian financial crisis, and by contestations of neoliberal governance from global civil society, two remakings of global capitalist governance can be identified: A ‘post-Washington consensus’ whose relation to neoliberali...

This paper compares three reduced-form models of heterogeneity in survey inflation expectations. On the one hand, we specify two models of forecasting inflation based on limited information flows of the type developed in Mankiw and Reis [2002. Sticky information versus sticky prices: a proposal to replace the new Keynesian Phillips curve. Quarterly Journal of Economics 117(4), 1295–1328]. We pr...