Macroeconomic fluctuations with HANK & SAM: an analytical approach
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- dc.contributor.author Ravn, Morten O.ca
- dc.contributor.author Sterk, Vincentca
- dc.date.accessioned 2016-12-07T09:39:07Z
- dc.date.available 2016-12-07T09:39:07Z
- dc.date.issued 2016-10
- dc.description.abstract New Keynesian models with unemployment and incomplete markets are rapidly becoming a new workhorse model in macroeconomics. Such models typically require heavy computational methods which may obscure intuition and overlook equilibria. We present a tractable version which can be characterized analytically. Our results highlight that - due the interaction between incomplete markets, sticky prices and endogenous unemployment risk - productivity shocks may have radically different effects than in traditional NK models, that the Taylor principle may fail, and that pessimistic beliefs may be self-fulfilling and move the economy into temporary episodes of low demand and high unemployment, as well as into a long-lasting .unemployment trap.. At the Zero Lower Bound, the presence of endogenous unemployment risk can create inflation and overturn paradoxical properties of the model. We further study financial asset prices and show that non-negligible risk premia emerge.ca
- dc.description.sponsorship The ADEMU Working Paper Series is being supported by the European Commission Horizon 2020 European Union funding for Research & Innovation, grant agreement No 649396.
- dc.format.mimetype application/pdfca
- dc.identifier.uri http://hdl.handle.net/10230/27699
- dc.language.iso engca
- dc.relation.ispartofseries ADEMU Working Paper Series;31
- dc.relation.projectID info:eu-repo/grantAgreement/EC/H2020/649396
- dc.rights This is an Open Access article distributed under the terms of the Creative Commons Attribution License Creative Commons Attribution 4.0 International, which permits unrestricted use, distribution and reproduction in any medium provided that the original work is properlyattributed.ca
- dc.rights.accessRights info:eu-repo/semantics/openAccessca
- dc.rights.uri http://creativecommons.org/licenses/by/4.0/ca
- dc.subject.keyword Sticky pricesen
- dc.subject.keyword Incomplete asset marketsen
- dc.subject.keyword Matching frictionsen
- dc.subject.keyword Multiple equilibriaen
- dc.subject.keyword Amplificationen
- dc.title Macroeconomic fluctuations with HANK & SAM: an analytical approachca
- dc.type info:eu-repo/semantics/workingPaperca