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A persistent criticism of general equilibrium models of monetary policy which incorporate nominal inertia in the form of the New Keynesian Phillips Curve (NKPC) is that they fail to capture the extent of inflation inertia in the data. In this paper we derive a general equilibrium model based on optimising behaviour, but which also implies a data consistent(More)
Individuals routinely devote time to skill acquisition by pursuing activities such as formal schooling, formal employer-provided training, and informal on-the-job training. Here, we use a business-cycle model to analyze the general-equilibrium implications of a representative agent's decision to devote time to skill acquisition; we also use the model to(More)
This paper develops the concept of tax rights to analyze the impact of fiscal institutions on economic development in transition economies. A government's tax rights are poorly defined when it and other governments and agencies can unilaterally levy taxes on the same tax base. Existing evidence suggests that Chinese local governments have gained more(More)
We propose and implement a coherent statistical framework for combining theoretical and empirical models of macroeconomic activity. The framework is Bayesian, and enables the formal yet probabilistic incorporation of uncertainty regarding the parameterization of theoretical models. The approach is illustrated using a neoclassical business-cycle model which(More)
@ We employ a neoclassical business-cycle model that builds on the Greenwood, Hercowitz, and Huffman (1988) variable-utilization framework to study two sources of business-cycle fluctuations: marginal efficiency of investment shocks, and total factor productivity shocks. The parameters of the model are estimated using a Bayesian procedure that accommodates(More)