Calibrating the Equilibrium Condition of a New Keynesian Model with Uncertainty
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Abstract:This paper presents a theoretical analysis of the simulated impact of uncertainty in a New Keynesian model. In order to incorporate uncertainty, the basic three-equation framework is modified by higher-order approximation resulting in a non-linear (dynamic) IS curve. Using impulse response analyses to examine the behavior of the model after a cost shock, I find interest rates in the version with uncertainty to be lower in contrast to the case under certainty.
2018 ◽
Vol 32
(3)
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pp. 87-112
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2019 ◽
Vol 11
(4)
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pp. 310-345
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2013 ◽
Vol 103
(4)
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pp. 1172-1211
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2010 ◽
Vol 2
(3)
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pp. 183-205
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