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- Troy Davig, Eric Leeper, Thomas Lubik, Emmanuel DeVeirman, Todd Walker, Alex Wolman
- 2002

This paper assesses the implications for optimal discretionary monetary policy if the slope of the Phillips curve changes. The paper first derives a Phillips curve from the optimal pricing decision of a monopolistic firm that faces a changing cost of price adjustment. The second aspect of the paper constructs a utility-based welfare criterion. A novel… (More)

- KENNETH KASA, TODD B. WALKER, +5 authors Pierre-Olivier Weill
- 2006

This paper develops a dynamic asset pricing model with persistent heterogeneous beliefs. The model features competitive traders who receive idiosyncratic signals about an underlying fundamentals process. We adapt Futia’s (1981) frequency domain methods to derive conditions on the fundamentals that guarantee noninvertibility of the mapping between observed… (More)

How do information flows influence business cycle dynamics in models with anticipated (news shocks) and unanticipated innovations? To address this question, we show how alternative specifications of news affect the equilibrium by deriving the mapping between news shocks and the endogenous variables in a simple analytical model. News shocks are shown to add… (More)

- Eric M. Leeper, Nora Traum, Todd B. Walker
- 2011

Bayesian prior predictive analysis of five nested DSGE models suggests that model specifications and prior distributions tightly circumscribe the range of possible government spending multipliers. Multipliers are decomposed into wealth and substitution effects, yielding uniform comparisons across models. By constraining the multiplier to tight ranges, model… (More)

Changes in fiscal policy typically entail two kinds of lags: the legislative lag—between when legislation is proposed and when it is signed into law—and the implementation lag—from when a new fiscal law is enacted to when it takes effect. These lags imply that substantial time evolves between when news arrives about fiscal changes and when the changes… (More)

- Troy Davig, Eric M. Leeper, Todd B. Walker
- 2010

We use a rational expectations framework to assess the implications of rising debt in an environment with a “fiscal limit. The fiscal limit is defined as the point where the government no longer has the ability to finance higher debt levels by increasing taxes, so either an adjustment to fiscal spending or monetary policy must occur to stabilize debt. We… (More)

- Troy Davig, Eric M. Leeper, Todd B. Walker
- 2009

We develop a rational expectations framework to study the consequences of alternative means to resolve the “unfunded liabilities” problem—the projected exponential growth in federal Social Security, Medicare, and Medicaid spending with no known plan for financing the transfers. Resolution requires specifying a probability distribution for how and when… (More)

- Giacomo Rondina, Todd B. Walker, Christian Hellwig, Ken Kasa, Eric Leeper
- 2011

We study Rational Expectations equilibria in dynamic models with dispersed information and signal extraction from endogenous variables. An Information Equilibrium is established that delivers existence and uniqueness conditions in a new class of RE equilibria where agents remain dispersedly informed even after observing the entire history of equilibrium… (More)

- Sascha Baghestanian, Todd B. Walker
- 2015

We investigate the relationship between anchoring and the emergence of bubbles in experimental asset markets. We show that setting a visual anchor at the fundamental value (FV) in the first period only is sufficient to eliminate or to significantly reduce bubbles in laboratory asset markets. If no FV-anchor is set, bubble-crash patterns emerge. Our results… (More)

- Todd B. Walker
- 2006

Accommodating asymmetric information in a dynamic asset pricing model is technically challenging due to the problems associated with higher-order expectations. That is, rational investors are forced into a situation where they must forecast the forecasts of other agents. In a dynamic setting, this problem telescopes into the infinite future and the… (More)