|
|
|
|
||||
|
||||
The BMW Model as a Static Approximation of a Forward-looking New Keynesian Macroeconomic ModelPeter BofingerUniversity of Würzburg - Institute of Economics and Social Sciences Eric MayerUniversity of Würzburg - Institute of Economics and Social Sciences Timo WollmershaeuserIfo Institute for Economic Research; CESifo (Center for Economic Studies and Ifo Institute for Economic Research) November 2003 Wuerzburg Economics Working Paper No. 42 Abstract: Over the last decade a new consensus model has emerged in monetary macroeconomics, labelled New Keynesian macroeconomics (Clarida et al., 1999). It consists of three simple building blocs: a forward-looking IS-equation that is derived from the optimization problem of a representative household, a forward-looking Phillips curve that maps the optimal pricing decisions of monopolistically competitive firms facing restrictions on their ability to adjust wages or prices in a flexible manner, and a relationship that describes how monetary policy is conducted. In Bofinger, Mayer and Wollmershaeuser (2002a, 2002b) we developed the BMW model which takes this standard dynamic macro model to an intermediate audience in a down-to-earth fashion. This paper presents the linkages between our static BMW approach and a dynamic New Keynesian macro model.
Number of Pages in PDF File: 22 Keywords: BMW model, New Keynesian macroeconomic model, optimal monetary policy JEL Classification: A20, E10, E50, F41 working papers seriesDate posted: February 5, 2004Suggested CitationContact Information
|
|
|||||||||||||||||||||||||||||||||
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
FAQ
Terms of Use
Privacy Policy
Copyright
This page was processed by apollo1 in 0.562 seconds
