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Narayana KOCHERLAKOTA (Rochester) “21st Century Macro”

December 4, 2019, 1:00 pm - 2:15 pm

Time: 14:00pm – 15:15 pm
Date: 04th of December 2019
Place: Room 3105

Narayana KOCHERLAKOTA (Rochester) “21st Century Macro”

Abstract : In the 21st century, in the developed world, many key macroeconomic variables have been persistently low for a number of years, including:

  • inflation (both expected and realized)
  • growth (both expected and realized)
  • interest rates (both real and nominal, and both short-term and long-term)

I consider a class of standard representative agent rational expectations models in which fundamentals are deterministic and constant over time. I show that, for almost all models in this class, there is  a large set of stochastic equilibria that exhibit the above properties. The key to this result is an intertemporal complementarity in aggregate demand: if households perceive a risk of low aggregate demand in the future, they reduce current aggregate demand. This complementarity can create self-fulfilling equilibria with persistently low output and low expected growth.


December 4, 2019
1:00 pm - 2:15 pm
Event Categories:


Edouard CHALLE
Julien PRAT