The Monetary Transmission Mechanism.

Most authors have attributed the real effects of money in the short run either to mistaken expectations or to non-market clearing or both. In this paper we argue that neither of these channels is needed to explain the facts. We show that a competitive market clearing model in which money enters the production function is fully capable of mimicking the broad features of the data. Our argument relies on an explanation of "price stickiness" that exploits a multiplicity of equlibria in a rational expectations model.BUSINESS CYCLES;MONETARY POLICY;CENTRAL BANKS;MONEY;INTEREST RATE

Equilibrium dynamics in discrete-time endogenous growth models with social constant returns

Sectoral externalities, Endogenous growth, Dynamic determinacy/indeterminacy, E32, J24, O40,

Animal spirits and monetary policy

Animal spirits, Heuristics, Behavioral macroeconomics, Rational expectations, E10, E32, D83,

Rich Nations, Poor Nations: How Much Can Multiple Equilibria Explain?

This paper asks whether the income gap between rich and poor nations can be explained by multiple equilibria. We explore the quantitative implications of a simple two-sector general equilibrium model that gives rise to multiplicity, and calibrate the model for 127 countries. Under the assumptions of the model, around a quarter of the world’s economies are found to be in a low output equilibrium. We also find that, since the output gains associated with an equilibrium switch are sizeable, the model can explain between 15 and 25% of the variation in the logarithm of GDP per worker across countries. Copyright Springer Science + Business Media, Inc. 2006Poverty traps, Multiple equilibria, TFP differences, Calibration, C00, O14, O41, O47,