Lawrence Christiano

Using “business cycle accounting,” Chari, Kehoe, and McGrattan (2006) conclude that models of financial frictions which create a wedge in the intertemporal Euler equation are not promising avenues for modeling business cycle dynamics.

Macroeconomic and microeconomic data paint conflicting pictures of price behavior.

We evaluate the Friedman-Schwartz hypothesis that a more accommodative monetary policy could have greatly reduced the severity of the Great Depression.

What are the economic effects of an interest rate cut when an economy is in the midst of a financial crisis? Under what conditions will a cut stimulate output and employment, and raise welfare?

We illustrate the use of various frequency domain tools for estimating and testing dynamic, stochastic general equilibrium models.

We present a model embodying moderate amounts of nominal rigidities which accounts for the observed inertia in inflation and persistence in output.

We explore a hypothesis about the take-off in inflation that occurred in the early 1970s. According to the expectations trap hypothesis, the Fed was pushed into producing the high inflation out of fear of violating the public's inflation expectations.

The "ideal" band pass filter can be used to isolate the component of a time series that lies within a particular band of frequencies.

A well known result is that the Gaussian log-likelihood can be expressed as the sum over different frequency components.

We use the limited participation model of money as a laboratory for studying the operating characteristics of Taylor rules for setting the rate of interest. Rules are evaluated according to their ability to protect the economy from bad outcomes such as the burst of inflation observed in the 1970’s. Based on our analysis, we argue for a rule which: (i) raises the nominal interest rate more than one-for-one with a rise in inflation; and (ii) does not change the interest rate in response to a change in output relative to trend.

This paper presents an undetermined-coefficients method for obtaining a linear approximation to the solution of a dynamic rational-expectations model.

We describe and compare several algorithms for approximating the solution to a model in which inequality constraints occasionally bind.

How can price stability be achieved? Conventional wisdom says that a tough, independent central bank is all that is necessary.