phase diagrams

This paper builds a Beveridgean model of the Phillips curve. Prices respond to slack so the divine coincidence holds: prices are stable at full employment. The Phillips curve is kinked if wage cuts are more costly to producers than price hikes.

This paper resolves the anomalies of the New Keynesian model at the zero lower bound—explosive recession, forward-guidance puzzle, multiplier puzzle—by introducing wealth into the utility function.