https://github.com/pmichaillat/wunk

Phase diagrams from the paper "Resolving New Keynesian Anomalies with Wealth in the Utility Function"
https://github.com/pmichaillat/wunk

dynamical-systems euler-equation forward-guidance government-spending inflation new-keynesian-model paper-with-code phase-diagram phillips-curve saddle source wealth-in-utility wunk-model zero-lower-bound

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Phase diagrams from the paper "Resolving New Keynesian Anomalies with Wealth in the Utility Function"

• Host: GitHub
• URL: https://github.com/pmichaillat/wunk
• Owner: pmichaillat
• License: cc-by-4.0
• Created: 2022-02-22T21:08:50.000Z (over 2 years ago)
• Default Branch: main
• Last Pushed: 2024-04-12T18:12:55.000Z (7 months ago)
• Last Synced: 2024-04-13T02:21:23.313Z (7 months ago)
• Topics: dynamical-systems, euler-equation, forward-guidance, government-spending, inflation, new-keynesian-model, paper-with-code, phase-diagram, phillips-curve, saddle, source, wealth-in-utility, wunk-model, zero-lower-bound
• Homepage: https://pascalmichaillat.org/11/
• Size: 4.22 MB
• Stars: 7
• Watchers: 2
• Forks: 1
• Open Issues: 0
• Metadata Files:
  • Readme: README.md
  • License: LICENSE.md

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README

        
# Resolving New Keynesian Anomalies With Wealth in the Utility Function: Phase Diagrams

This repository contains the phase diagrams from the paper "Resolving New Keynesian Anomalies With Wealth in the Utility Function", written by [Pascal Michaillat](https://pascalmichaillat.org) and [Emmanuel Saez](https://eml.berkeley.edu/~saez/), and published in the [Review of Economics and Statistics](https://doi.org/10.1162/rest_a_00893) in May 2021.

## Paper webpage

The paper is available at https://pascalmichaillat.org/11/. The phase diagrams appear in figures 1–6.

## Situations described by the diagrams

The phase diagrams describe a range of situations.

+ Normal times – The natural rate of interest is positive, and monetary policy is active.

+ Zero lower bound (ZLB) – The natural rate of interest is negative, and the monetary-policy rate is zero.

+ ZLB episode of finite duration – The economy is at the ZLB between time 0 and time $T$, and it returns to normal after time $T$.

+ ZLB episode with forward guidance – The economy is at the ZLB between time 0 and time $T$. The economy is then in forward guidance between time $T$ and time $T + \Delta$: the natural rate of interest is positive but the monetary-policy rate is zero. Finally, the economy returns to normal after time $T + \Delta$. 

+ ZLB episode with government spending – The economy is at the ZLB between time 0 and time $T$. During the ZLB, government spending is positive. The economy returns to normal after time $T$.

## Phase diagrams for the NK model

The phase diagrams for the New Keynesian model (NK) are stored in the folder `nk`. The diagrams are drawn by hand using Keynote on Mac, and then exported to PDF.

+ `figure1A.key`, `figure1A.pdf` – Figure 1A: NK model in normal times

+ `figure1C.key`, `figure1C.pdf` – Figure 1C: NK model at the ZLB

+ `figure2A.key`, `figure2A.pdf` – Figure 2A: NK model with short ZLB episode

+ `figure2C.key`, `figure2C.pdf` – Figure 2C: NK model with long ZLB episode

+ `figure3A.key`, `figure3A.pdf` – Figure 3A: NK model in forward guidance

+ `figure3B.key`, `figure3B.pdf` – Figure 3B: NK model with short forward guidance after  ZLB

+ `figure3C.key`, `figure3C.pdf` – Figure 3C: NK model with medium forward guidance after ZLB

+ `figure3D.key`, `figure3D.pdf` – Figure 3D: NK model with long forward guidance after ZLB

+ `figure5A.key`, `figure5A.pdf` – Figure 5A: NK model at ZLB with no government spending

+ `figure5B.key`, `figure5B.pdf` – Figure 5B: NK model at ZLB with low government spending

+ `figure5C.key`, `figure5C.pdf` – Figure 5C: NK model at ZLB with medium government spending

+ `figure5D.key`, `figure5D.pdf` – Figure 5D: NK model at ZLB with high government spending

## Phase diagrams for the WUNK model

The phase diagrams for the New Keynesian model with wealth in the utility function (WUNK) are stored in the `wunk` folder. The diagrams are drawn by hand using Keynote on Mac, and then exported to PDF.

+ `figure1B.key`, `figure1B.pdf` – Figure 1B: WUNK model in normal times 

+ `figure1D.key`, `figure1D.pdf` – Figure 1D: WUNK model at the ZLB 

+ `figure2B.key`, `figure2B.pdf` – Figure 2B: WUNK model with short ZLB episode 

+ `figure2D.key`, `figure2D.pdf` – Figure 2D: WUNK model with long ZLB episode 

+ `figure4A.key`, `figure4A.pdf` – Figure 4A: WUNK model in forward guidance 

+ `figure4B.key`, `figure4B.pdf` – Figure 4B: WUNK model with a short ZLB episode before forward guidance 

+ `figure4C.key`, `figure4C.pdf` – Figure 4C: WUNK model with a long ZLB episode before forward guidance 

+ `figure4D.key`, `figure4D.pdf` – Figure 4D: WUNK model with all possible ZLB and forward guidance durations 

+ `figure6A.key`, `figure6A.pdf` – Figure 6A: WUNK model at ZLB with no government spending 

+ `figure6B.key`, `figure6B.pdf` – Figure 6B: WUNK model at ZLB with low government spending 

+ `figure6C.key`, `figure6C.pdf` – Figure 6C: WUNK model at ZLB with medium government spending 

+ `figure6D.key`, `figure6D.pdf` – Figure 6D: WUNK model at ZLB with high government spending 

## License

The content of this repository was created by Pascal Michaillat and Emmanuel Saez and is licensed under the [Creative Commons Attribution 4.0 International License](http://creativecommons.org/licenses/by/4.0/).