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Original paper

The Four-Equation New Keynesian Model

Volume: 105, Issue: 4, Pages: 931 - 947
Published: Jul 14, 2021
Abstract
This paper develops a New Keynesian model featuring financial intermediation, short- and long-term bonds, credit shocks, and scope for unconventional monetary policy. The log-linearized model reduces to four equations: Phillips and IS curves, as well as policy rules for the short-term interest rate and the central bank's long-bond portfolio (QE). Credit shocks and QE appear in both the IS and Phillips curves. In equilibrium, optimal monetary...
Paper Details
Title
The Four-Equation New Keynesian Model
Published Date
Jul 14, 2021
Volume
105
Issue
4
Pages
931 - 947
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