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Persistent Stochastic Shocks in a New Keynesian Model with Uncertainty

  • Book
  • © 2017

Overview

Authors:
  1. Tobias Kranz

    1. IV/VWL, Universität Trier, Trier, Germany

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  • Study in the field of economics
  • Introduction of the New Keynesian framework
  • Mathematical concepts and background information
  • Includes supplementary material: sn.pub/extras

Part of the book series: BestMasters (BEST)

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Table of contents (5 chapters)

  1. Front Matter

    Pages I-XIII
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  2. Introduction

    • Tobias Kranz
    Pages 1-2

  3. New Keynesian Model

    • Tobias Kranz
    Pages 3-19

  4. Persistent Shocks

    • Tobias Kranz
    Pages 20-31

  5. Model with Uncertainty

    • Tobias Kranz
    Pages 32-48

  6. Conclusion

    • Tobias Kranz
    Pages 49-49

  7. Back Matter

    Pages 51-72
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Keywords

About this book

The book introduces the New Keynesian framework, historically through a literature overview and through a step-by-step derivation of a New Keynesian Phillips curve, an intertemporal IS curve, and a targeting rule for the central bank. This basic version is then expanded by introducing cost and demand shocks and uncertainty. The latter enters the model via second order Taylor approximation instead of linearization. Bringing all equations together results in an equilibrium condition which is simulated with a wide range of parameter values, including possible crisis scenarios. The author finds that accounting for uncertainty – regarding growth and inflation expectations – can lead to lower nominal interest rates set by the central bank.

Authors and Affiliations

  • IV/VWL, Universität Trier, Trier, Germany

    Tobias Kranz

About the author

Tobias Kranz obtained his Master of Science degree in Economics at the University of Trier in 2015. He has been working as postgraduate at the chair of Empirical Economics (University of Trier) since 2016.

 

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