Federico Ravenna

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Most analyses of the U.S. Great Moderation have been based on VAR methods , and have consistently pointed toward good luck as the main explanation for the greater macroeconomic stability of recent years. Using data generated by a New-Keynesian model in which the only source of change is the move from passive to active monetary policy, we show that VARs may(More)
This paper presents preliminary findings and is being distributed to economists and other interested readers solely to stimulate discussion and elicit comments. The views expressed in the paper are those of the authors and are not necessarily reflective of views at the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions(More)
We investigate the implications for monetary policy of nominal rigidities that lead to ine¢ cient price setting and labor market frictions that lead to ine¢ cient matching of unemployed workers with job vacancies. We characterize the tax instruments that implement the …rst best equilibrium allocations and then examine the trade-o¤s faced by monetary policy(More)
A huge literature analyzes the performance of simple rules in closed-economy models when the policy-maker observes only a noisy measure of the state of the economy. This paper extends the analysis to a small-open economy new keynesian model. Passing from a closed-economy model to an open-economy one, there is another simple policy rule available to the(More)
The views expressed in this paper are those of the authors and do not necessarily reflect the views of the Bank of Finland. We thank Herbert Dawid and Willi Semmler (Editors) as well as two anonymous referees for their very insightful comments and suggestions. We also thank Oskari Vähämaa kindly provided us with some of the financial series employed in this(More)
Replicating the flexible price allocation in models with nominal rigidities and labor market frictions that lead to an inefficient matching of unemployed workers with job vacancies, even if feasible, is generally not desirable. We characterize the tax instruments that implement the first best allocation and examine the trade-offs faced by monetary policy if(More)
Indeed, one of the …rst lessons one learns from studying a variety of hypothetical models is that the problem of economic stabilization is, even in principle, an extremely intricate one, and that a much more thorough investigation of both theoretical principles and empirical relationships would be needed before detailed policy recommendations could be(More)
T he steep increases in unemployment associated with the financial crisis and global recession of 2008–2009, and the widespread focus on unemployment in both the popular press and in policy debates, is in sharp contrast to the canonical new Keynesian model in which unemployment is noticeably absent. In that model, workers are never unemployed, and only(More)