The New Neoclassical Synthesis and the Role of Monetary Policy

Macroeconomic Policy in DSGE and Agent-Based Models Redux: New Developments and Challenges Ahead

“…Let us begin by presenting how policy analysis is usually carried out in DSGE models, which are at the center of the New Neoclassical Synthesis (NNS, Goodfriend and King, 1997). The canonical DSGE model has a real-business-cycle (RBC) core supplemented with monopolistic competition, nominal imperfections and a monetary policy rule (for a more detailed exposition of the DSGE model, cf.…”

Robustifying learnability

“…We study two sample economies, one the very simple model of money demand in hyperinflations of Cagan [10], the other the linearized neo-Keynesian model originated by Woodford ([48], [49]), Rotemberg and Woodford [39] and Goodfriend and King [25]. Closed-form solutions for μ, being non-linear functions of the eigenvalues of models, are not generally feasible.…”

“…Higher levels of persistence in policy setting are deleterious for robustification of model learnability in inflation-forecast based policy rules. 25 Of course these particular results are contingent on the relative weightings for pertur- 23 Since degree of robustness is a function of the model's eigenvalues and those are non-linear functions of the parameters of the model and of the learning mechanism, it is not possible to identify the source of these potholes. That said, it isn't necessary either.…”

“…However the current paper is-the first in this area-is already ambitious enough and so we leave the issue for future research. 25 We tested φ r up to nearly 20. What we found is that the radii fell as φ r rose for intermediate levels, and then rose slowly again for φ r À 1.…”

À la poursuite du Graal : le successeur d’IS-LM est-il identifié?

“…Avant d'esquisser comment ce défi pourrait être relevé, il est approprié de faire référence à deux articles qui anticipent partiellement notre propos. Goodfriend et King (1997) s'approprient la dénomi-nation « nouvelle synthèse néo-classique », dénomination qu'ils prêtent à un modèle d'équilibre général dynamique combinant rigidités nominales et concurrence imparfaite. Ils mettent en évidence, entre autres, le fait que les premières tendraient à diminuer l'impact de choc technologique sans l'apport de la deuxième hypothèse.…”