The New Keynesian sticky-price model has become increasingly popular for monetary-policy analysis. However, there have been conflicting results on the empirical performance of the model. In this paper, I attempt to reconcile these conflicting claims by examining various specifications of the model within the context of a single framework. I find that the New Keynesian model does not fit the U.S...

In mainstream macroeconomics, the cross-country pattern of unemployment should reflect ‘natural’ rates (NAIRUs), which in turn are explained mainly by the rigidities imposed by labor market institutions and policies. While this view has framed most of the empirical work to date, the evidence so far is not very compelling. Recent work in the Keynesian tradition suggests that more attention shoul...

Price rigidity is the key mechanism for propagating business cycles in traditional Keynesian theory. Yet the New Keynesian literature has failed to show that sticky prices by themselves can e¤ectively propagate business cycles in general equilibrium. We show that price rigidity in fact can (by itself) give rise to a strong propagation mechanism of the business cycle in standard New Keynesian mo...

S ince John Maynard Keynes wrote the General Theory of Employment, Interest, and Money in 1936, Keynesian economics has been highly influential among academics and policymakers. Keynes has certainly had his detractors, though, with the most influential being Milton Friedman, Robert Lucas, and Edward C. Prescott. Monetarist thought, the desire for stronger theoretical foundations in macroeconomi...

Heterogeneous beliefs modify the New Keynesian Phillips curve by introducing a term in cross-section distribution of expectations. To take that model to data, we develop novel functional data approach estimation and inference accounts for variation distributions We find this may be summarized using handful factors, demonstrate their statistical economic relevance inflation dynamics. Our results...

This appendix contains additional literature review and many extensions left out of the text for reasons of space. Sections A and B critically review more of the literature on identification and determinacy in new-Keynesian and related models. If you want to know " what about x's approach to these issues? " you are likely to find an answer here. In particular, Section A.1 reviews the learnabili...

Abstract The orthodox theory of wage negotiations considers that the trade union monopoly causes a rigidity real wages which is, itself, cause unemployment. model this negotiation ("Nash bargaining") only situations where between and firm succeed. In article, we attempt to read WS-PS from Keynesian point view. Our reflects fact successful is one case among other situations, including failure ex...