Lectures at the Czech National Bank,
February 8, 9.
Introducing
Financial Frictions into the New Keynesian Model
Lecture handouts:
The ‘Consensus’ New Keynesian model.
Microfoundations
for the Costly State Verification (CSV) Approach to Financial Frictions.
Introducing CSV into the Consensus New Keynesian model.
Introducing CSV into Small Open Economy Model.
Readings:
Bernanke, Gertler and
Gilchrist’s classic 1999 paper.
Christiano, Motto, Rostagno (2003): Using the BGG model to analyze
the cause of the US Great Depression, and the reason it lasted so long.
Christiano,
Motto, Rostagno (2009):
Using the BGG model to understand the causes of economic fluctuations in the EA
and the US.
Christiano,
Trabandt and Walentin (2009): Financial and labor market frictions in a
small open economy model of Sweden. (Handout
for financial frictions in a simpler setting than the one in CTW.)