Motivated by the evidence that risk premia are large and countercyclical, this paper studies a
tractable real business cycle model with a small risk of economic disaster, such as the Great …

This book retraces the history of macroeconomics from Keynes's General Theory to the
present. Central to it is the contrast between a Keynesian era and a Lucasian-or dynamic …

We investigate identification issues in DSGE models and their consequences for parameter
estimation and model evaluation when the objective function measures the distance …

I develop a behavioral macroeconomic model in which agents have cognitive limitations. As
a result, they use simple but biased rules (heuristics) to forecast future output and inflation …

In mainstream economics, and particularly in New Keynesian macroeconomics, the booms
and busts that characterize capitalism arise because of large external shocks. The …

Booms and busts in economic activity are a regular occurrence. They lead to a strong
empirical regularity, ie that output gaps and output growth are non-normally distributed …

This article presents experimental evidence from a monetary sticky price economy in which
output and inflation depend on expected future inflation. Rational inflation expectations do …

I distinguish two types of macroeconomic models. The first type are top-down models in
which some or all agents are capable of understanding the whole picture and use this …

Can a model with limited labor market insurance explain standard macro and labor market
data jointly? We construct a monetary model in which: i) the unemployed are worse off than …

This article examines the role of money in a small‐scale dynamic general equilibrium model
of the euro zone estimated by maximum likelihood. The model allows for both intertemporal …