Output hysteresis and optimal monetary policy
Federal Reserve Bank of Boston; University of California, Davis
New Keynesian model with Schumpeterian endogenous growth through R&D investment and creative destruction, featuring staggered wage setting (Calvo), monopolistically competitive intermediate goods sectors, and innovation by entrepreneurs
final goods firms: perfect competition with CES aggregation; intermediate goods firms: monopolistic competition with limit pricing; entrepreneurs: invest in R&D to innovate
Table 2
Nominal GDP level targeting rule at ZLB - permanent output gap of -2.51%