A New Keynesian Model of the Business Cycle and Financial Fragility

1993 ◽  
pp. 125-138
Author(s):  
Domenico Delli Gatti ◽  
Mauro Gallegati
Keyword(s):  
Business Cycle ◽  
New Keynesian ◽  
Financial Fragility ◽  
New Keynesian Model ◽  
Keynesian Model ◽  
The Business Cycle

scholarly journals QUADRATIC LABOR ADJUSTMENT COSTS, BUSINESS CYCLE DYNAMICS, AND OPTIMAL MONETARY POLICY

2012 ◽  
Vol 17 (2) ◽  
pp. 464-475 ◽  
Author(s):  
Wolfgang Lechthaler ◽  
Dennis J. Snower
Keyword(s):  
Monetary Policy ◽  
Business Cycle ◽  
Adjustment Costs ◽  
New Keynesian ◽  
Optimal Monetary Policy ◽  
Labor Adjustment Costs ◽  
Keynesian Model ◽  
Labor Adjustment ◽  
Output Persistence ◽  
The Business Cycle

We build quadratic labor adjustment costs into an otherwise standard New Keynesian model of the business cycle and show that this increases output persistence in a vein similar to that of other models of labor market frictions. Furthermore, we demonstrate the implication of quadratic labor adjustment costs for monetary policy. We show that there is a simple rule determining whether quadratic labor adjustment costs imply a trade-off between stabilizing inflation and output.

scholarly journals NEW PERSPECTIVES ON DEPRECIATION SHOCKS AS A SOURCE OF BUSINESS CYCLE FLUCTUATIONS

2013 ◽  
Vol 18 (6) ◽  
pp. 1209-1233 ◽  
Author(s):  
Francesco Furlanetto ◽  
Martin Seneca
Keyword(s):  
Business Cycle ◽  
New Keynesian ◽  
Real Business Cycle ◽  
New Keynesian Model ◽  
Aggregate Fluctuations ◽  
The Real ◽  
Business Cycle Fluctuations ◽  
Shock Process ◽  
Keynesian Model ◽  
Capital Depreciation

In this paper we study the transmission of capital depreciation shocks. The existing literature in the real business cycle tradition has concluded that these shocks are irrelevant to business cycle fluctuations. We show that they are potentially important drivers of aggregate fluctuations in a new Keynesian model. Nominal rigidities and some persistence in the shock process are the key ingredients that generate co-movement across real variables.

scholarly journals LOAN PRODUCTION AND MONETARY POLICY

2017 ◽  
Vol 23 (1) ◽  
pp. 101-143
Author(s):  
Miguel Casares ◽  
Luca Deidda ◽  
Jose E. Galdon-Sanchez
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Business Cycle ◽  
Financial Frictions ◽  
New Keynesian ◽  
New Keynesian Model ◽  
Optimal Monetary Policy ◽  
External Finance ◽  
Business Cycle Fluctuations ◽  
Keynesian Model

We examine optimal monetary policy in a New Keynesian model with unemployment and financial frictions where banks produce loans using equity as collateral. Firms and households demand loans to finance externally a fraction of their flows of expenditures. Our findings show amplifying business-cycle effects of a more rigid loan production technology. In the monetary policy analysis, the optimal rule clearly outperforms a Taylor-type rule. The optimized interest-rate response to the external finance premium turns significantly negative when either banking rigidities are high or when financial shocks are the only source of business cycle fluctuations.

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