Abstract
The main objective of this paper is to examine a dynamic general equilibrium condition out of a basic three-equation New Keynesian model (NKM), augmented with stochastic terms and non-linearity. More precisely, the additive terms behave like persistent stochastic shocks and are modeled as an exogenous first-order autoregressive process. In line with the literature (see, among others, the textbooks by Galí 2015 and Walsh 2010) cost shock and demand shock are utilized for the New Keynesian Phillips curve (NKPC) and the forward-looking IS curve respectively.
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© 2017 Springer Fachmedien Wiesbaden
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Kranz, T. (2017). Introduction. In: Persistent Stochastic Shocks in a New Keynesian Model with Uncertainty. BestMasters. Springer Gabler, Wiesbaden. https://doi.org/10.1007/978-3-658-15639-8_1
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DOI: https://doi.org/10.1007/978-3-658-15639-8_1
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Publisher Name: Springer Gabler, Wiesbaden
Print ISBN: 978-3-658-15638-1
Online ISBN: 978-3-658-15639-8
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