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New directions in stabilisation policies

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  • Ralf Fendel

    ()
    (WHU Koblenz – Otto Beisheim Graduate School of Management, Department of Economics, Vallendar (Germany))

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    Abstract

    Recently, a new class of macroeconomic business cycle models has emerged. Stochastic dynamic general equilibrium models with rational expectations originally employed by RBC researchers are combined with nominal rigidities and imperfect competition traditionally highlighted by New Keynesian economists. This class of models leads to a new paradigm in business cycle theory and stabilization policies. The paper presents the main characteristics and implications of the new class of models in a predominantly non-technical way. In order to highlight the progress connected with the new class of models, it puts them into the context of former debates on stabilization policy, such as the Phillips curve dispute.

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    File URL: http://ojs.uniroma1.it/index.php/PSLQuarterlyReview/article/view/9832/9717
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    Bibliographic Info

    Article provided by Banca Nazionale del Lavoro in its journal Banca Nazionale del Lavoro Quarterly Review.

    Volume (Year): 57 (2004)
    Issue (Month): 231 ()
    Pages: 365-394

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    Handle: RePEc:psl:bnlqrr:2004:42

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    Related research

    Keywords: Business Cycle; Cycle; Equilibrium; Macroeconomics; New Keynesian; Rational Expectation; Stabilization;

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    1. Cooley, Thomas F & Hansen, Gary D, 1989. "The Inflation Tax in a Real Business Cycle Model," American Economic Review, American Economic Association, vol. 79(4), pages 733-48, September.
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    7. Mark Gertler & Jordi Gali & Richard Clarida, 1999. "The Science of Monetary Policy: A New Keynesian Perspective," Journal of Economic Literature, American Economic Association, vol. 37(4), pages 1661-1707, December.
    8. Lawrence J. Christiano & Martin Eichenbaum & Robert J. Vigfusson, 2003. "The response of hours to a technology shock: evidence based on direct measures of technology," International Finance Discussion Papers 790, Board of Governors of the Federal Reserve System (U.S.).
    9. Andolfatto, David, 1996. "Business Cycles and Labor-Market Search," American Economic Review, American Economic Association, vol. 86(1), pages 112-32, March.
    10. V. V. Chari & Patrick J. Kehoe & Ellen R. McGrattan, 1996. "Sticky Price Models of the Business Cycle: Can the Contract Multiplier Solve the Persistence Problem?," NBER Working Papers 5809, National Bureau of Economic Research, Inc.
    11. Richard Clarida & Jordi Gali & Mark Gertler, 2001. "Optimal Monetary Policy in Open versus Closed Economies: An Integrated Approach," American Economic Review, American Economic Association, vol. 91(2), pages 248-252, May.
    12. Blanchard, Olivier Jean & Kiyotaki, Nobuhiro, 1987. "Monopolistic Competition and the Effects of Aggregate Demand," American Economic Review, American Economic Association, vol. 77(4), pages 647-66, September.
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    14. Arnold, Lutz G., 2002. "Business Cycle Theory," OUP Catalogue, Oxford University Press, number 9780199256822, September.
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