Andrea Pescatori

We study optimal monetary policy in an economy where the debt overhang of firms leads to underinvestment and underproduction.

We show that search frictions embedded in an RBC model primarily manifest themselves at the extensive margin.

We show that search frictions embedded in an RBC model primarily manifest themselves at the extensive margin.

We study the macroeconomic implications of the debt overhang distortion.

We study the macroeconomic implications of the debt overhang distortion.

We assess the extent to which the period of great U.S. macroeconomic stability since the mid-1980s can be accounted for by changes in oil shocks and the oil share in GDP.

The present paper studies optimal monetary policy when the representative agent assumption is abandoned and financial wealth heterogeneity across households is introduced.

An exogenous oil price shock raises inflation and contracts output, similar to a negative productivity shock.

Models of the macroeconomy have gotten quite sophisticated, thanks to decades of development and advances in computing power. Such models have also become indispensable tools for monetary policymakers, useful both for forecasting and comparing different policy options. Their failure to predict the recent financial crisis does not negate their use, it only points to some areas that can be improved.

This Commentary explains concerns associated with the combination of deflation, low economic activity, and zero nominal interest rates and describes how monetary policy might be conducted in such a situation.

Three explanations have been suggested for the moderation in real GDP and inflation that has occurred in industrialized countries since the 1980s: good luck, better monetary policy, and structural changes in the economy.

Many experts believe that early childhood development is economic development, and the research shows it’s economic development with a high public return.