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The Effects of Bank Capital on Lending: What Do We Know, and What Does It Mean?
The effect of bank capital on lending is a critical determinant of the linkage between financial conditions and real activity, and has received especial attention in the recent financial crisis. We
How Useful Are Estimated DSGE Model Forecasts for Central Bankers?
Dynamic stochastic general equilibrium (DSGE) models are a prominent tool for forecasting at central banks, and the competitive forecasting performance of these models relative to alternatives,
A Utility-Based Welfare Criterion in a Model with Endogenous Capital Accumulation
This paper extends the utility-based welfare criterion developed by Rotemberg and Woodford (1997) and Woodford (2003) to a model with endogenous capital accumulation. The welfare criterion obtained
Learning and Shifts in Long-Run Productivity Growth
Shifts in the long-run rate of productivity growth are difficult, in real time, to distinguish from transitory fluctuations. We analyze the evolution of forecasts of long-run productivity growth
Time-to-Build, Time-to-Plan, Habit-Persistence, and the Liquidity Effect
The general inability of sticky-price monetary business cycle models to generate liquidity effects has been noted in the recent literature by authors such as Christiano (1991), Christiano and
The Unreliability of Credit-to-GDP Ratio Gaps in Real-Time: Implications for Countercyclical Capital Buffers
Macroeconomists have long recognized that activity-gap measures are unreliable in real time and that this can present serious difficulties for stabilization policy. This paper investigates whether
The Responses of Wages and Prices to Technology Shocks
This paper reexamines wage and price dynamics in response to permanent shocks to productivity. We estimate a micro-founded dynamic general equilibrium (DGE) model of the U.S. economy with sticky
Natural Rate Measures in an Estimated DSGE Model of the U.S. Economy
This paper presents a monetary DSGE model of the U.S. economy. The model captures the most important production, expenditure, and nominal-contracting decisions underlying economic data while
Real-Time Properties of the Federal Reserve's Output Gap
Abstract We consider the revision properties of Federal Reserve Board staff estimates of the output gap after the mid-1990s and examine the usefulness of these estimates for inflation forecasting.
Documentation of the Research and Statistics Divisions Estimated DSGE Model of the U.S. Economy: 2006 Version
This paper provides documentation for the large-scale estimated DSGE model of the U.S. economy used in Edge, Kiley, and Laforte (2007). The model represents part of an ongoing research project (the