What is Hysteresis?

Hysteresis is referred to the hypothesis that recessions may have permanent effects on the level of output relative to trend.In a recent research “Inflation and Activity – Two Explorations and their Monetary Policy Implications”,...

What is New Keynesian DSGE Models?

DSGE stands for “dynamic stochastic general equilibrium.”. As Blanchard described in his note “Do DSGE Models Have a Future?” , DSGE Models have three major modeling characteristics.As its name suggested, one important aspect...

What is Fiscal Theory of Price Level?

The Fiscal Theory of the Price Level says that money has value because the government accepts it for taxes, and inflation is fundamentally a fiscal phenomenon. It can also be viewed as a model...