The Transmission of Monetary Policy through Redistributions and Durable Purchases
|
|
- Tracey Ray
- 6 years ago
- Views:
Transcription
1 The Transmission of Monetary Policy through Redistributions and Durable Purchases Vincent Sterk and Silvana Tenreyro UCL, LSE September 2015 Sterk and Tenreyro (UCL, LSE) OMO September / 28
2 The Monetary Transmission Mechanism Workhorse models of monetary policy: are centred on nominal rigidities (New Keynesian model) Sterk and Tenreyro (UCL, LSE) OMO September / 28
3 The Monetary Transmission Mechanism Workhorse models of monetary policy: are centred on nominal rigidities (New Keynesian model) abstract from redistributional e ects (representative agent) Sterk and Tenreyro (UCL, LSE) OMO September / 28
4 This paper Study di erent channel of monetary transmission. Simple DSGE model no sticky prices or nominal wages Sterk and Tenreyro (UCL, LSE) OMO September / 28
5 This paper Study di erent channel of monetary transmission. Simple DSGE model no sticky prices or nominal wages integrate later Sterk and Tenreyro (UCL, LSE) OMO September / 28
6 This paper Study di erent channel of monetary transmission. Simple DSGE model no sticky prices or nominal wages integrate later heterogeneous households Sterk and Tenreyro (UCL, LSE) OMO September / 28
7 This paper Study di erent channel of monetary transmission. Simple DSGE model no sticky prices or nominal wages integrate later heterogeneous households parsimonious life-cycle structure Sterk and Tenreyro (UCL, LSE) OMO September / 28
8 This paper Study di erent channel of monetary transmission. Simple DSGE model no sticky prices or nominal wages integrate later heterogeneous households parsimonious life-cycle structure government or scal authority: net debtor Sterk and Tenreyro (UCL, LSE) OMO September / 28
9 This paper Study di erent channel of monetary transmission. Simple DSGE model no sticky prices or nominal wages integrate later heterogeneous households parsimonious life-cycle structure government or scal authority: net debtor key role for durables Sterk and Tenreyro (UCL, LSE) OMO September / 28
10 This paper Study di erent channel of monetary transmission. Simple DSGE model no sticky prices or nominal wages integrate later heterogeneous households parsimonious life-cycle structure government or scal authority: net debtor key role for durables in line with VAR evidence Sterk and Tenreyro (UCL, LSE) OMO September / 28
11 This paper Study di erent channel of monetary transmission. Simple DSGE model no sticky prices or nominal wages integrate later heterogeneous households parsimonious life-cycle structure government or scal authority: net debtor key role for durables in line with VAR evidence monetary policy implemented through open market operations Sterk and Tenreyro (UCL, LSE) OMO September / 28
12 This paper Study di erent channel of monetary transmission. Simple DSGE model no sticky prices or nominal wages integrate later heterogeneous households parsimonious life-cycle structure government or scal authority: net debtor key role for durables in line with VAR evidence monetary policy implemented through open market operations contrast to helicopter drops Sterk and Tenreyro (UCL, LSE) OMO September / 28
13 Monetary policy implementation Open Market Operation (OMO): central bank sells/buys short-term bonds Modern practice Sterk and Tenreyro (UCL, LSE) OMO September / 28
14 Monetary policy implementation Open Market Operation (OMO): central bank sells/buys short-term bonds Modern practice more sophisticated OMOs since nancial crisis (e.g., longer-term securities) Sterk and Tenreyro (UCL, LSE) OMO September / 28
15 Monetary policy implementation Open Market Operation (OMO): central bank sells/buys short-term bonds Modern practice more sophisticated OMOs since nancial crisis (e.g., longer-term securities) Theoretical literature: irrelevance results found in: Sterk and Tenreyro (UCL, LSE) OMO September / 28
16 Monetary policy implementation Open Market Operation (OMO): central bank sells/buys short-term bonds Modern practice more sophisticated OMOs since nancial crisis (e.g., longer-term securities) Theoretical literature: irrelevance results found in: Wallace (1981), Sargent & Smith (1982), Sterk and Tenreyro (UCL, LSE) OMO September / 28
17 Monetary policy implementation Open Market Operation (OMO): central bank sells/buys short-term bonds Modern practice more sophisticated OMOs since nancial crisis (e.g., longer-term securities) Theoretical literature: irrelevance results found in: Wallace (1981), Sargent & Smith (1982), Eggertsson & Woodford (2003), Woodford (2011)... Sterk and Tenreyro (UCL, LSE) OMO September / 28
18 Monetary policy implementation Open Market Operation (OMO): central bank sells/buys short-term bonds Modern practice more sophisticated OMOs since nancial crisis (e.g., longer-term securities) Theoretical literature: irrelevance results found in: Wallace (1981), Sargent & Smith (1982), Eggertsson & Woodford (2003), Woodford (2011)......but all of the above rule out redistributional e ects Sterk and Tenreyro (UCL, LSE) OMO September / 28
19 Monetary policy implementation Open Market Operation (OMO): central bank sells/buys short-term bonds Modern practice more sophisticated OMOs since nancial crisis (e.g., longer-term securities) Theoretical literature: irrelevance results found in: Wallace (1981), Sargent & Smith (1982), Eggertsson & Woodford (2003), Woodford (2011)......but all of the above rule out redistributional e ects Fiscal authorities do not undo the redistributive e ects from MP Sterk and Tenreyro (UCL, LSE) OMO September / 28
20 Monetary policy implementation Open Market Operation (OMO): central bank sells/buys short-term bonds Modern practice more sophisticated OMOs since nancial crisis (e.g., longer-term securities) Theoretical literature: irrelevance results found in: Wallace (1981), Sargent & Smith (1982), Eggertsson & Woodford (2003), Woodford (2011)......but all of the above rule out redistributional e ects Fiscal authorities do not undo the redistributive e ects from MP when researchers estimate the transmission mechanisms, these e ects are present... Sterk and Tenreyro (UCL, LSE) OMO September / 28
21 The transmission channel in our model - preview Expansionary OMO triggers: an increase in prices, surprise destruction of nominal private wealth Sterk and Tenreyro (UCL, LSE) OMO September / 28
22 The transmission channel in our model - preview Expansionary OMO triggers: an increase in prices, surprise destruction of nominal private wealth a negative wealth e ect for households, particularly old Sterk and Tenreyro (UCL, LSE) OMO September / 28
23 The transmission channel in our model - preview Expansionary OMO triggers: an increase in prices, surprise destruction of nominal private wealth a negative wealth e ect for households, particularly old increased incentive save for retirement =) lower real interest rate Sterk and Tenreyro (UCL, LSE) OMO September / 28
24 The transmission channel in our model - preview Expansionary OMO triggers: an increase in prices, surprise destruction of nominal private wealth a negative wealth e ect for households, particularly old increased incentive save for retirement =) lower real interest rate a substitution towards durables Sterk and Tenreyro (UCL, LSE) OMO September / 28
25 The transmission channel in our model - preview Expansionary OMO triggers: an increase in prices, surprise destruction of nominal private wealth a negative wealth e ect for households, particularly old increased incentive save for retirement =) lower real interest rate a substitution towards durables durable boom: increase in employment and output Sterk and Tenreyro (UCL, LSE) OMO September / 28
26 The transmission channel in our model - preview Expansionary OMO triggers: an increase in prices, surprise destruction of nominal private wealth a negative wealth e ect for households, particularly old increased incentive save for retirement =) lower real interest rate a substitution towards durables durable boom: increase in employment and output with search and matching frictions: increase in investment in durable matches (employment rises) Sterk and Tenreyro (UCL, LSE) OMO September / 28
27 The transmission channel in our model - preview Expansionary OMO triggers: an increase in prices, surprise destruction of nominal private wealth a negative wealth e ect for households, particularly old increased incentive save for retirement =) lower real interest rate a substitution towards durables durable boom: increase in employment and output with search and matching frictions: increase in investment in durable matches (employment rises) reduction in real government debt and persistent increase in central bank revenues Sterk and Tenreyro (UCL, LSE) OMO September / 28
28 The transmission channel in our model - preview Expansionary OMO triggers: an increase in prices, surprise destruction of nominal private wealth a negative wealth e ect for households, particularly old increased incentive save for retirement =) lower real interest rate a substitution towards durables durable boom: increase in employment and output with search and matching frictions: increase in investment in durable matches (employment rises) reduction in real government debt and persistent increase in central bank revenues rebated to tax-payers via the Treasury (2-3% of G) Sterk and Tenreyro (UCL, LSE) OMO September / 28
29 The transmission channel in our model - preview Expansionary OMO triggers: an increase in prices, surprise destruction of nominal private wealth a negative wealth e ect for households, particularly old increased incentive save for retirement =) lower real interest rate a substitution towards durables durable boom: increase in employment and output with search and matching frictions: increase in investment in durable matches (employment rises) reduction in real government debt and persistent increase in central bank revenues rebated to tax-payers via the Treasury (2-3% of G) breakdown Ricardian Equivalence Sterk and Tenreyro (UCL, LSE) OMO September / 28
30 Empirical evidence VectorAutoRegresson Figure: Responses to an expansionary monetary policy shock, identi ed following Gertler and Karadi (2015). Sterk and Tenreyro (UCL, LSE) OMO September / 28
31 Model Sterk and Tenreyro (UCL, LSE) OMO September / 28
32 Setup Closed economy, overlapping generations. Sterk and Tenreyro (UCL, LSE) OMO September / 28
33 Setup Closed economy, overlapping generations. 2 life cycle stages (young, old), stochastic ageing (prob. ρ o ) and death (prob. ρ x ), Gertler (1999). Sterk and Tenreyro (UCL, LSE) OMO September / 28
34 Setup Closed economy, overlapping generations. 2 life cycle stages (young, old), stochastic ageing (prob. ρ o ) and death (prob. ρ x ), Gertler (1999). Following retirement, immediate death shock may occur. Sterk and Tenreyro (UCL, LSE) OMO September / 28
35 Setup Closed economy, overlapping generations. 2 life cycle stages (young, old), stochastic ageing (prob. ρ o ) and death (prob. ρ x ), Gertler (1999). Following retirement, immediate death shock may occur. Population size normalized to one. Stationary population: ρ o ν = ρ x (1 ν + ρ o ν) where ν is the fraction of young agents in the population (#newborn=#aging=#dying). Sterk and Tenreyro (UCL, LSE) OMO September / 28
36 Setup Young agents supply labor (h t ), old agents are not productive Sterk and Tenreyro (UCL, LSE) OMO September / 28
37 Setup Young agents supply labor (h t ), old agents are not productive Agents derive utility from non-durables (c t ), durables (d t ) and money (m t ). No utility from bequests. Sterk and Tenreyro (UCL, LSE) OMO September / 28
38 Setup Young agents supply labor (h t ), old agents are not productive Agents derive utility from non-durables (c t ), durables (d t ) and money (m t ). No utility from bequests. Agents can also save in bonds (b t ) Sterk and Tenreyro (UCL, LSE) OMO September / 28
39 Setup Firms are perfectly competitive, producing durables and non-durables with the same technology y t = h t. They rent labor on an competitive labor market. Pro t maximization implies w t = 1. Sterk and Tenreyro (UCL, LSE) OMO September / 28
40 Setup Firms are perfectly competitive, producing durables and non-durables with the same technology y t = h t. They rent labor on an competitive labor market. Pro t maximization implies w t = 1. Government consists of a central bank and a Treasury. Sterk and Tenreyro (UCL, LSE) OMO September / 28
41 Setup Firms are perfectly competitive, producing durables and non-durables with the same technology y t = h t. They rent labor on an competitive labor market. Pro t maximization implies w t = 1. Government consists of a central bank and a Treasury. The treasury makes a transfer τ s t to each household of type s. We denote an agent s life-cycle status by superscript s 2 fn, y, og, with n denoting a newborn young agent, y a pre-existing young agent, and o an old agent. Sterk and Tenreyro (UCL, LSE) OMO September / 28
42 Setup Firms are perfectly competitive, producing durables and non-durables with the same technology y t = h t. They rent labor on an competitive labor market. Pro t maximization implies w t = 1. Government consists of a central bank and a Treasury. The treasury makes a transfer τ s t to each household of type s. We denote an agent s life-cycle status by superscript s 2 fn, y, og, with n denoting a newborn young agent, y a pre-existing young agent, and o an old agent. Wealth of deceased agents equally distributed among the young. Sterk and Tenreyro (UCL, LSE) OMO September / 28
43 Old agents Optimization problem old agent (s = o) in real terms: V o (a, Γ) = max U(c, d, m) + β (1 ρ c,d,m,b x ) EV o (a 0, Γ 0 ) s.t. c + d + m + b = a + τ o a 0 (1 δ) d + m (1 + r) b π0 1 + π 0, c, d, m 0, where V o (a, Γ) is the value function, a denotes individual wealth, Γ is the aggregate state and π is the net rate of in ation. Also, β is the agents subjective discount factor, δ is the depreciation rate of durables and E is the conditional expectations operator. Sterk and Tenreyro (UCL, LSE) OMO September / 28
44 Young agents Optimization problem young agents (s = n, y) V s (a, Γ) = max U(c, d, m) ζ h1+κ c,d,m,b,h 1 + κ + β (1 ρ o ) EV y (a 0, Γ 0 ) +βρ o (1 ρ x ) EV o (a 0, Γ 0 ) s.t. c + d + m + b = a + wh + τ bq + τ s, a 0 (1 δ) d + m (1 + r) b π0 1 + π 0, c, d, m 0, where w is the wage rate and τ bq is a bequest transfer. n the utility function ζ > 0 is a scaling s parameter and κ > 0 determines the Frisch elasticity of labor supply. Sterk and Tenreyro (UCL, LSE) OMO September / 28
45 Central Bank The central bank controls the nominal money supply, M t, by conducting open market operations. n particular, the central bank can sell or buy government bonds. We denote the stock of bonds held by the central bank as B cb t. Sterk and Tenreyro (UCL, LSE) OMO September / 28
46 Central Bank The central bank controls the nominal money supply, M t, by conducting open market operations. n particular, the central bank can sell or buy government bonds. We denote the stock of bonds held by the central bank as B cb t. The use of these open market operations implies that: B cb t B cb t 1 = M t M t 1. Sterk and Tenreyro (UCL, LSE) OMO September / 28
47 Central Bank The central bank controls the nominal money supply, M t, by conducting open market operations. n particular, the central bank can sell or buy government bonds. We denote the stock of bonds held by the central bank as B cb t. The use of these open market operations implies that: B cb t B cb t 1 = M t M t 1. The central bank transfers its accounting pro t -seigniorage- to the treasury. The remittance, labeled τ cb t, is given by: t = r t 1bt cb π t τ cb Sterk and Tenreyro (UCL, LSE) OMO September / 28
48 Central Bank The central bank controls the nominal money supply, M t, by conducting open market operations. n particular, the central bank can sell or buy government bonds. We denote the stock of bonds held by the central bank as B cb t. The use of these open market operations implies that: B cb t B cb t 1 = M t M t 1. The central bank transfers its accounting pro t -seigniorage- to the treasury. The remittance, labeled τ cb t, is given by: t = r t 1bt cb π t τ cb To analyze monetary policy shocks, we assume that M t is driven by an exogenous process subject to stochastic shocks. Sterk and Tenreyro (UCL, LSE) OMO September / 28
49 Treasury We abstract from government consumption/investment. Sterk and Tenreyro (UCL, LSE) OMO September / 28
50 Treasury We abstract from government consumption/investment. The treasury runs a balanced budget, but starts o with an initial level of bonds B g t 1 (which will be negative). The treasury s budget constraint in real terms is: r t 1 b g t π t + τ cb t = νρ o τ n t + ν (1 ρ o ) τ y t + (1 ν) τ o t where the total amount of transfers is adjusted to balance the government s budget Sterk and Tenreyro (UCL, LSE) OMO September / 28
51 Treasury We abstract from government consumption/investment. The treasury runs a balanced budget, but starts o with an initial level of bonds B g t 1 (which will be negative). The treasury s budget constraint in real terms is: r t 1 b g t π t + τ cb t = νρ o τ n t + ν (1 ρ o ) τ y t + (1 ν) τ o t where the total amount of transfers is adjusted to balance the government s budget Net bene ciary is the government. Key how it redistributes gain. Sterk and Tenreyro (UCL, LSE) OMO September / 28
52 Treasury Retired agents are assumed not to be subject to transfers/taxes, i.e. we set τ o t = 0. Sterk and Tenreyro (UCL, LSE) OMO September / 28
53 Treasury Retired agents are assumed not to be subject to transfers/taxes, i.e. we set τ o t = 0. To render the model tractable, we assume that transfers to newborns equal the after tax wealth of pre-existing young agents. This is achieved by setting: a y t + τ y t = τ n t where a y t is the average wealth among pre-existing young agents. Sterk and Tenreyro (UCL, LSE) OMO September / 28
54 Treasury Retired agents are assumed not to be subject to transfers/taxes, i.e. we set τ o t = 0. To render the model tractable, we assume that transfers to newborns equal the after tax wealth of pre-existing young agents. This is achieved by setting: a y t + τ y t = τ n t where a y t is the average wealth among pre-existing young agents. What arises is a representative young agent. We preserve heterogeneity between old and young agents, as well as heterogeneity among old agents. Sterk and Tenreyro (UCL, LSE) OMO September / 28
55 Market clearing Market clearing constraints durables and non-durables: c t = νct y + (1 ν) ct o d t = νdt y + (1 ν) dt o, Resource constraint, clearing conditions for money and bond market: Magnitude bequest transfer: c t + d t = νh y t + (1 δ) d t 1, m t = νm y t + (1 ν) m o t, 0 = b g t + b cb t + νb y t + (1 ν) b o t τ bq t = R ρ x i :s=o a i,t di + ρ o ρ x νa y t ν Sterk and Tenreyro (UCL, LSE) OMO September / 28
56 Equilibrium De nition. A recursive competitive equilibrium is de ned by policy rules for non-durable consumption, c s (a, Γ), durable consumption, d s (a, Γ), money holdings, m s (a, Γ), bond holdings, b s (a, Γ), labor supply, h s (a, Γ), with s = n, y, o, cb, g, as well as laws of motion for in ation, the nominal interest rate and the real wage, such that households optimize their expected life-time utility subject to their constraints and the law of motion for the aggregate state, the treasury and central banks follow their speci ed policies, the markets for bonds, money, goods and labor clear in every period. The aggregate state Γ includes the value of the monetary policy shock, the distribution of wealth among agents, as well as the initial holdings of assets by households, the treasury and the central bank. Sterk and Tenreyro (UCL, LSE) OMO September / 28
57 Representative agent version f we set ρ x = 1 old agents are e ectively removed from the model. Sterk and Tenreyro (UCL, LSE) OMO September / 28
58 Representative agent version f we set ρ x = 1 old agents are e ectively removed from the model. Given the transfers to newborns, the model becomes observationally equivalent to one with an in nitely-lived representative agent with subjective discount factor eβ = β (1 ρ o ). Sterk and Tenreyro (UCL, LSE) OMO September / 28
59 Representative agent version f we set ρ x = 1 old agents are e ectively removed from the model. Given the transfers to newborns, the model becomes observationally equivalent to one with an in nitely-lived representative agent with subjective discount factor eβ = β (1 ρ o ). Easy to show that monetary policy becomes neutral with respect to real activity when utility is separable in money and consumption. No wealth e ects (Weil (1991)). Sterk and Tenreyro (UCL, LSE) OMO September / 28
60 Monetary neutrality Following arguments similar to Sidrauski (1967) one can show that, provided that money and goods enter the utility function separably, monetary policy does not a ect real outcomes. To show this, consider the representative agent s rst-order conditions for durables, labor supply, and the aggregate resource constraint: U c,t = U d,t + eβ (1 δ) E t U c,t+1 U c,t = ζh κ t c t + d t = h t + (1 δ) d t 1 where U c,t and U d,t are, respectively, the agents marginal utilities with respect to non-durables and durables. Under preference separability, this is a closed dynamic system of 3 equations and 3 endogenous variables. No nominal variables enter this system. Sterk and Tenreyro (UCL, LSE) OMO September / 28
61 Adding search and matching frictions Diamond-Mortensen-Pissarides style matching friction. Young workers live in representative family, as in Merz (1995) and Andolfatto (1996). Workers are born without a job, lose job with xed probability. Search for jobs when unemployed, accept any job o er in equilibrium. ) shut o labour supply chanel. Employment determined by rms endogenous vacancy posting decision. ) worker- rm relationships are durables. Sterk and Tenreyro (UCL, LSE) OMO September / 28
62 Quantitative implementation Sterk and Tenreyro (UCL, LSE) OMO September / 28
63 Computation Models with wealth heterogeneity and aggregate uctuations typically di cult to solve, because wealth distribution is part of the economic state (Krusell and Smith (1998)). Sterk and Tenreyro (UCL, LSE) OMO September / 28
64 Computation Models with wealth heterogeneity and aggregate uctuations typically di cult to solve, because wealth distribution is part of the economic state (Krusell and Smith (1998)). Despite the presence of heterogeneity, our model can be solved using standard methods ( rst-order perturbation), under the following preferences: U(c i,t, d i,t, m i,t ) = u1 i,t σ 1 1 σ, u i,t hc ɛ 1 ɛ i,t + ηd ɛ 1 ɛ i,t + µm ɛ 1 ɛ i,t σ, ɛ, η, µ > 0. Baseline: σ = ɛ = 1 (separability). i ɛ ɛ 1, Sterk and Tenreyro (UCL, LSE) OMO September / 28
65 Shock process Money growth rule: M t M t 1 = 1 + z t where z t is a mean reverting process following: z t = ξ (m m t 1 ) + ε t, ξ 2 [0, 1), where ε t is an i.i.d. shock innovation. (mplicit in ation target is zero.) Sterk and Tenreyro (UCL, LSE) OMO September / 28
66 Parameter values (quarterly model) Sterk and Tenreyro (UCL, LSE) OMO September / 28
67 Expansionary monetary policy shock Sterk and Tenreyro (UCL, LSE) OMO September / 28
68 Young versus old Sterk and Tenreyro (UCL, LSE) OMO September / 28
69 Monetary expansion OMO vs helicopter drop Sterk and Tenreyro (UCL, LSE) OMO September / 28
70 Conclusions Simple life-cycle DSGE model without nominal rigidities Responses to monetary policy shocks in line with VAR evidence: key role for durables can help the NK model in tting the data Transmission mechanism: two redistributional channels: Among households Between households and government mplementation of monetary policy matters (OMO vs helicopter drop) Sterk and Tenreyro (UCL, LSE) OMO September / 28
The Transmission of Monetary Policy Operations through Redistributions and Durable Purchases
The Transmission of Monetary Policy Operations through Redistributions and Durable Purchases Vincent Sterk and Silvana Tenreyro UCL, LSE June 2014 Sterk and Tenreyro (UCL, LSE) OMO June 2014 1 / 52 The
More informationDiscussion of The Transmission of Monetary Policy through Redistributions and Durables Purchases by Silvana Tenreyro and Vincent Sterk
Discussion of The Transmission of Monetary Policy through Redistributions and Durables Purchases by Silvana Tenreyro and Vincent Sterk Adrien Auclert Stanford (visiting Princeton) Conference on Monetary
More informationLecture Notes. Petrosky-Nadeau, Zhang, and Kuehn (2015, Endogenous Disasters) Lu Zhang 1. BUSFIN 8210 The Ohio State University
Lecture Notes Petrosky-Nadeau, Zhang, and Kuehn (2015, Endogenous Disasters) Lu Zhang 1 1 The Ohio State University BUSFIN 8210 The Ohio State University Insight The textbook Diamond-Mortensen-Pissarides
More informationFiscal Consolidation in a Currency Union: Spending Cuts Vs. Tax Hikes
Fiscal Consolidation in a Currency Union: Spending Cuts Vs. Tax Hikes Christopher J. Erceg and Jesper Lindé Federal Reserve Board October, 2012 Erceg and Lindé (Federal Reserve Board) Fiscal Consolidations
More informationThe Transmission of Monetary Policy through Redistributions and Durable Purchases
The Transmission of Monetary Policy through Redistributions and Durable Purchases Vincent Sterk University College London Silvana Tenreyro London School of Economics June 0 0 Abstract Using a tractable
More informationThe Transmission of Monetary Policy through Redistributions and Durable Purchases
The Transmission of Monetary Policy through Redistributions and Durable Purchases Vincent Sterk and Silvana Tenreyro January 2016 CEP Working Paper 2016/1 ABOUT THE AUTHORS Vincent Sterk is a lecturer
More informationTFP Persistence and Monetary Policy. NBS, April 27, / 44
TFP Persistence and Monetary Policy Roberto Pancrazi Toulouse School of Economics Marija Vukotić Banque de France NBS, April 27, 2012 NBS, April 27, 2012 1 / 44 Motivation 1 Well Known Facts about the
More informationCredit Frictions and Optimal Monetary Policy
Vasco Cúrdia FRB of New York 1 Michael Woodford Columbia University National Bank of Belgium, October 28 1 The views expressed in this paper are those of the author and do not necessarily re ect the position
More informationECON 4325 Monetary Policy and Business Fluctuations
ECON 4325 Monetary Policy and Business Fluctuations Tommy Sveen Norges Bank January 28, 2009 TS (NB) ECON 4325 January 28, 2009 / 35 Introduction A simple model of a classical monetary economy. Perfect
More informationHousehold income risk, nominal frictions, and incomplete markets 1
Household income risk, nominal frictions, and incomplete markets 1 2013 North American Summer Meeting Ralph Lütticke 13.06.2013 1 Joint-work with Christian Bayer, Lien Pham, and Volker Tjaden 1 / 30 Research
More informationEconomic stability through narrow measures of inflation
Economic stability through narrow measures of inflation Andrew Keinsley Weber State University Version 5.02 May 1, 2017 Abstract Under the assumption that different measures of inflation draw on the same
More informationSTATE UNIVERSITY OF NEW YORK AT ALBANY Department of Economics. Ph. D. Comprehensive Examination: Macroeconomics Fall, 2016
STATE UNIVERSITY OF NEW YORK AT ALBANY Department of Economics Ph. D. Comprehensive Examination: Macroeconomics Fall, 2016 Section 1. (Suggested Time: 45 Minutes) For 3 of the following 6 statements, state
More informationSTATE UNIVERSITY OF NEW YORK AT ALBANY Department of Economics. Ph. D. Comprehensive Examination: Macroeconomics Spring, 2013
STATE UNIVERSITY OF NEW YORK AT ALBANY Department of Economics Ph. D. Comprehensive Examination: Macroeconomics Spring, 2013 Section 1. (Suggested Time: 45 Minutes) For 3 of the following 6 statements,
More informationUnemployment (fears), Precautionary Savings, and Aggregate Demand
Unemployment (fears), Precautionary Savings, and Aggregate Demand Wouter den Haan (LSE), Pontus Rendahl (Cambridge), Markus Riegler (LSE) ESSIM 2014 Introduction A FT-esque story: Uncertainty (or fear)
More informationFiscal Consolidations in Currency Unions: Spending Cuts Vs. Tax Hikes
Fiscal Consolidations in Currency Unions: Spending Cuts Vs. Tax Hikes Christopher J. Erceg and Jesper Lindé Federal Reserve Board June, 2011 Erceg and Lindé (Federal Reserve Board) Fiscal Consolidations
More informationBalance Sheet Recessions
Balance Sheet Recessions Zhen Huo and José-Víctor Ríos-Rull University of Minnesota Federal Reserve Bank of Minneapolis CAERP CEPR NBER Conference on Money Credit and Financial Frictions Huo & Ríos-Rull
More informationUncertainty, Liquidity and Financial Cycles
Uncertainty, Liquidity and Financial Cycles Ge Zhou Zhejiang University Jan 2019, ASSA Ge Zhou (Zhejiang University) Uncertainty, Liquidity and Financial Cycles Jan 2019 1 / 26 2500.00 Recession SP 500
More informationUninsured Unemployment Risk and Optimal Monetary Policy
Uninsured Unemployment Risk and Optimal Monetary Policy Edouard Challe CREST & Ecole Polytechnique ASSA 2018 Strong precautionary motive Low consumption Bad aggregate shock High unemployment Low output
More informationSTATE UNIVERSITY OF NEW YORK AT ALBANY Department of Economics. Ph. D. Comprehensive Examination: Macroeconomics Spring, 2016
STATE UNIVERSITY OF NEW YORK AT ALBANY Department of Economics Ph. D. Comprehensive Examination: Macroeconomics Spring, 2016 Section 1. Suggested Time: 45 Minutes) For 3 of the following 6 statements,
More informationQuestion 1 Consider an economy populated by a continuum of measure one of consumers whose preferences are defined by the utility function:
Question 1 Consider an economy populated by a continuum of measure one of consumers whose preferences are defined by the utility function: β t log(c t ), where C t is consumption and the parameter β satisfies
More informationThe Welfare Cost of Asymmetric Information: Evidence from the U.K. Annuity Market
The Welfare Cost of Asymmetric Information: Evidence from the U.K. Annuity Market Liran Einav 1 Amy Finkelstein 2 Paul Schrimpf 3 1 Stanford and NBER 2 MIT and NBER 3 MIT Cowles 75th Anniversary Conference
More informationOptimal Monetary Policy Rules and House Prices: The Role of Financial Frictions
Optimal Monetary Policy Rules and House Prices: The Role of Financial Frictions A. Notarpietro S. Siviero Banca d Italia 1 Housing, Stability and the Macroeconomy: International Perspectives Dallas Fed
More informationHeterogeneous Firm, Financial Market Integration and International Risk Sharing
Heterogeneous Firm, Financial Market Integration and International Risk Sharing Ming-Jen Chang, Shikuan Chen and Yen-Chen Wu National DongHwa University Thursday 22 nd November 2018 Department of Economics,
More informationSTATE UNIVERSITY OF NEW YORK AT ALBANY Department of Economics. Ph. D. Comprehensive Examination: Macroeconomics Spring, 2009
STATE UNIVERSITY OF NEW YORK AT ALBANY Department of Economics Ph. D. Comprehensive Examination: Macroeconomics Spring, 2009 Section 1. (Suggested Time: 45 Minutes) For 3 of the following 6 statements,
More informationFiscal Policy and Economic Growth
Chapter 5 Fiscal Policy and Economic Growth In this chapter we introduce the government into the exogenous growth models we have analyzed so far. We first introduce and discuss the intertemporal budget
More informationConcerted Efforts? Monetary Policy and Macro-Prudential Tools
Concerted Efforts? Monetary Policy and Macro-Prudential Tools Andrea Ferrero Richard Harrison Benjamin Nelson University of Oxford Bank of England Rokos Capital 20 th Central Bank Macroeconomic Modeling
More informationLecture 2, November 16: A Classical Model (Galí, Chapter 2)
MakØk3, Fall 2010 (blok 2) Business cycles and monetary stabilization policies Henrik Jensen Department of Economics University of Copenhagen Lecture 2, November 16: A Classical Model (Galí, Chapter 2)
More informationIntergenerational Policy and the Measurement of the Tax Incidence of Unfunded Liabilities
Intergenerational Policy and the Measurement of the Tax Incidence of Unfunded Liabilities Juan Carlos Conesa, Universitat Autònoma de Barcelona Carlos Garriga, Federal Reserve Bank of St. Louis May 26th,
More informationUncertainty Shocks In A Model Of Effective Demand
Uncertainty Shocks In A Model Of Effective Demand Susanto Basu Boston College NBER Brent Bundick Boston College Preliminary Can Higher Uncertainty Reduce Overall Economic Activity? Many think it is an
More informationSupply-side effects of monetary policy and the central bank s objective function. Eurilton Araújo
Supply-side effects of monetary policy and the central bank s objective function Eurilton Araújo Insper Working Paper WPE: 23/2008 Copyright Insper. Todos os direitos reservados. É proibida a reprodução
More informationLecture 23 The New Keynesian Model Labor Flows and Unemployment. Noah Williams
Lecture 23 The New Keynesian Model Labor Flows and Unemployment Noah Williams University of Wisconsin - Madison Economics 312/702 Basic New Keynesian Model of Transmission Can be derived from primitives:
More informationEstimating Macroeconomic Models of Financial Crises: An Endogenous Regime-Switching Approach
Estimating Macroeconomic Models of Financial Crises: An Endogenous Regime-Switching Approach Gianluca Benigno 1 Andrew Foerster 2 Christopher Otrok 3 Alessandro Rebucci 4 1 London School of Economics and
More informationFiscal Expansions Can Increase Unemployment: Theory and Evidence from OECD countries
Fiscal Expansions Can Increase Unemployment: Theory and Evidence from OECD countries 15th September 21 Abstract Structural VARs indicate that for many OECD countries the unemployment rate signi cantly
More informationMacroeconomics. Basic New Keynesian Model. Nicola Viegi. April 29, 2014
Macroeconomics Basic New Keynesian Model Nicola Viegi April 29, 2014 The Problem I Short run E ects of Monetary Policy Shocks I I I persistent e ects on real variables slow adjustment of aggregate price
More informationOn the Merits of Conventional vs Unconventional Fiscal Policy
On the Merits of Conventional vs Unconventional Fiscal Policy Matthieu Lemoine and Jesper Lindé Banque de France and Sveriges Riksbank The views expressed in this paper do not necessarily reflect those
More informationHousehold Debt, Financial Intermediation, and Monetary Policy
Household Debt, Financial Intermediation, and Monetary Policy Shutao Cao 1 Yahong Zhang 2 1 Bank of Canada 2 Western University October 21, 2014 Motivation The US experience suggests that the collapse
More informationOptimal Negative Interest Rates in the Liquidity Trap
Optimal Negative Interest Rates in the Liquidity Trap Davide Porcellacchia 8 February 2017 Abstract The canonical New Keynesian model features a zero lower bound on the interest rate. In the simple setting
More informationSDP Macroeconomics Final exam, 2014 Professor Ricardo Reis
SDP Macroeconomics Final exam, 2014 Professor Ricardo Reis Answer each question in three or four sentences and perhaps one equation or graph. Remember that the explanation determines the grade. 1. Question
More informationCountry Spreads as Credit Constraints in Emerging Economy Business Cycles
Conférence organisée par la Chaire des Amériques et le Centre d Economie de la Sorbonne, Université Paris I Country Spreads as Credit Constraints in Emerging Economy Business Cycles Sarquis J. B. Sarquis
More informationAggregate Implications of Lumpy Adjustment
Aggregate Implications of Lumpy Adjustment Eduardo Engel Cowles Lunch. March 3rd, 2010 Eduardo Engel 1 1. Motivation Micro adjustment is lumpy for many aggregates of interest: stock of durable good nominal
More informationComprehensive Exam. August 19, 2013
Comprehensive Exam August 19, 2013 You have a total of 180 minutes to complete the exam. If a question seems ambiguous, state why, sharpen it up and answer the sharpened-up question. Good luck! 1 1 Menu
More informationBooms and Busts in Asset Prices. May 2010
Booms and Busts in Asset Prices Klaus Adam Mannheim University & CEPR Albert Marcet London School of Economics & CEPR May 2010 Adam & Marcet ( Mannheim Booms University and Busts & CEPR London School of
More informationAccounting for Patterns of Wealth Inequality
. 1 Accounting for Patterns of Wealth Inequality Lutz Hendricks Iowa State University, CESifo, CFS March 28, 2004. 1 Introduction 2 Wealth is highly concentrated in U.S. data: The richest 1% of households
More information1 Dynamic programming
1 Dynamic programming A country has just discovered a natural resource which yields an income per period R measured in terms of traded goods. The cost of exploitation is negligible. The government wants
More information1. Money in the utility function (continued)
Monetary Economics: Macro Aspects, 19/2 2013 Henrik Jensen Department of Economics University of Copenhagen 1. Money in the utility function (continued) a. Welfare costs of in ation b. Potential non-superneutrality
More informationMenu Costs and Phillips Curve by Mikhail Golosov and Robert Lucas. JPE (2007)
Menu Costs and Phillips Curve by Mikhail Golosov and Robert Lucas. JPE (2007) Virginia Olivella and Jose Ignacio Lopez October 2008 Motivation Menu costs and repricing decisions Micro foundation of sticky
More informationAdvanced Modern Macroeconomics
Advanced Modern Macroeconomics Asset Prices and Finance Max Gillman Cardi Business School 0 December 200 Gillman (Cardi Business School) Chapter 7 0 December 200 / 38 Chapter 7: Asset Prices and Finance
More informationStock Price, Risk-free Rate and Learning
Stock Price, Risk-free Rate and Learning Tongbin Zhang Univeristat Autonoma de Barcelona and Barcelona GSE April 2016 Tongbin Zhang (Institute) Stock Price, Risk-free Rate and Learning April 2016 1 / 31
More informationAchieving Actuarial Balance in Social Security: Measuring the Welfare Effects on Individuals
Achieving Actuarial Balance in Social Security: Measuring the Welfare Effects on Individuals Selahattin İmrohoroğlu 1 Shinichi Nishiyama 2 1 University of Southern California (selo@marshall.usc.edu) 2
More informationCredit Frictions and Optimal Monetary Policy
Credit Frictions and Optimal Monetary Policy Vasco Cúrdia FRB New York Michael Woodford Columbia University Conference on Monetary Policy and Financial Frictions Cúrdia and Woodford () Credit Frictions
More informationThe Costs of Losing Monetary Independence: The Case of Mexico
The Costs of Losing Monetary Independence: The Case of Mexico Thomas F. Cooley New York University Vincenzo Quadrini Duke University and CEPR May 2, 2000 Abstract This paper develops a two-country monetary
More informationThe Real Business Cycle Model
The Real Business Cycle Model Economics 3307 - Intermediate Macroeconomics Aaron Hedlund Baylor University Fall 2013 Econ 3307 (Baylor University) The Real Business Cycle Model Fall 2013 1 / 23 Business
More informationUnemployment (Fears), Precautionary Savings, and Aggregate Demand
Unemployment (Fears), Precautionary Savings, and Aggregate Demand Wouter J. Den Haan (LSE & CEPR), Pontus Rendahl (University of Cambridge & CEPR), and Markus Riegler (LSE) January 27, 2014 Overview Heterogeneous
More informationOn the new Keynesian model
Department of Economics University of Bern April 7, 26 The new Keynesian model is [... ] the closest thing there is to a standard specification... (McCallum). But it has many important limitations. It
More information1. Money in the utility function (start)
Monetary Policy, 8/2 206 Henrik Jensen Department of Economics University of Copenhagen. Money in the utility function (start) a. The basic money-in-the-utility function model b. Optimal behavior and steady-state
More informationHousehold Finance in China
Household Finance in China Russell Cooper 1 and Guozhong Zhu 2 October 22, 2016 1 Department of Economics, the Pennsylvania State University and NBER, russellcoop@gmail.com 2 School of Business, University
More informationA Macroeconomic Model with Financial Panics
A Macroeconomic Model with Financial Panics Mark Gertler, Nobuhiro Kiyotaki, Andrea Prestipino NYU, Princeton, Federal Reserve Board 1 March 218 1 The views expressed in this paper are those of the authors
More informationAdvanced Macroeconomics II. Fiscal Policy
Advanced Macroeconomics II Fiscal Policy Lorenza Rossi (Spring 2014) University of Pavia Part of these slides are based on Jordi Galì slides for Macroeconomia Avanzada II. Outline Fiscal Policy in the
More informationHabit Formation in State-Dependent Pricing Models: Implications for the Dynamics of Output and Prices
Habit Formation in State-Dependent Pricing Models: Implications for the Dynamics of Output and Prices Phuong V. Ngo,a a Department of Economics, Cleveland State University, 22 Euclid Avenue, Cleveland,
More informationGrowth and Inclusion: Theoretical and Applied Perspectives
THE WORLD BANK WORKSHOP Growth and Inclusion: Theoretical and Applied Perspectives Session IV Presentation Sectoral Infrastructure Investment in an Unbalanced Growing Economy: The Case of India Chetan
More informationThe New Keynesian Approach to Monetary Policy Analysis: Lessons and New Directions
The to Monetary Policy Analysis: Lessons and New Directions Jordi Galí CREI and U. Pompeu Fabra ice of Monetary Policy Today" October 4, 2007 The New Keynesian Paradigm: Key Elements Dynamic stochastic
More informationNot All Oil Price Shocks Are Alike: A Neoclassical Perspective
Not All Oil Price Shocks Are Alike: A Neoclassical Perspective Vipin Arora Pedro Gomis-Porqueras Junsang Lee U.S. EIA Deakin Univ. SKKU December 16, 2013 GRIPS Junsang Lee (SKKU) Oil Price Dynamics in
More informationCorporate Finance and Monetary Policy
Corporate Finance and Monetary Policy Guillaume Rocheteau Randall Wright Cathy Zhang U. of California, Irvine U. of Wisconsin, Madison Purdue University CIGS Conference on Macroeconomic Theory and Policy,
More informationEndogenous Markups in the New Keynesian Model: Implications for In ation-output Trade-O and Optimal Policy
Endogenous Markups in the New Keynesian Model: Implications for In ation-output Trade-O and Optimal Policy Ozan Eksi TOBB University of Economics and Technology November 2 Abstract The standard new Keynesian
More informationInflation & Welfare 1
1 INFLATION & WELFARE ROBERT E. LUCAS 2 Introduction In a monetary economy, private interest is to hold not non-interest bearing cash. Individual efforts due to this incentive must cancel out, because
More informationAging, Social Security Reform and Factor Price in a Transition Economy
Aging, Social Security Reform and Factor Price in a Transition Economy Tomoaki Yamada Rissho University 2, December 2007 Motivation Objectives Introduction: Motivation Rapid aging of the population combined
More informationFiscal Policy, Welfare, and the Zero Lower Bound
Fiscal Policy, Welfare, and the Zero Lower Bound Florin Bilbiie y Tommaso Monacelli z Roberto Perotti x February 24, 202 Abstract We study the welfare implications of two types of policies at the ZLB:
More information1. Cash-in-Advance models a. Basic model under certainty b. Extended model in stochastic case. recommended)
Monetary Economics: Macro Aspects, 26/2 2013 Henrik Jensen Department of Economics University of Copenhagen 1. Cash-in-Advance models a. Basic model under certainty b. Extended model in stochastic case
More informationThe Maturity Structure of Debt, Monetary Policy and Expectations Stabilization
The Maturity Structure of Debt, Monetary Policy and Expectations Stabilization Stefano Eusepi Federal Reserve Bank of New York Bruce Preston Columbia University and ANU The views expressed are those of
More informationFiscal and Monetary Policies: Background
Fiscal and Monetary Policies: Background Behzad Diba University of Bern April 2012 (Institute) Fiscal and Monetary Policies: Background April 2012 1 / 19 Research Areas Research on fiscal policy typically
More informationDoes the Social Safety Net Improve Welfare? A Dynamic General Equilibrium Analysis
Does the Social Safety Net Improve Welfare? A Dynamic General Equilibrium Analysis University of Western Ontario February 2013 Question Main Question: what is the welfare cost/gain of US social safety
More informationWelfare-based optimal monetary policy with unemployment and sticky prices: A linear-quadratic framework
Welfare-based optimal monetary policy with unemployment and sticky prices: A linear-quadratic framework Federico Ravenna and Carl E. Walsh June 2009 Abstract We derive a linear-quadratic model that is
More informationOil Price Uncertainty in a Small Open Economy
Yusuf Soner Başkaya Timur Hülagü Hande Küçük 6 April 212 Oil price volatility is high and it varies over time... 15 1 5 1985 199 1995 2 25 21 (a) Mean.4.35.3.25.2.15.1.5 1985 199 1995 2 25 21 (b) Coefficient
More informationQUANTITATIVE EASING. University College London and CfM CEPR. November 16, Abstract
QUANTITATIVE EASING Wei Cui and Vincent Sterk University College London and CfM CEPR November 6, 28 Abstract Is Quantitative Easing (QE) an effective substitute for conventional monetary policy? We study
More informationDoves for the Rich, Hawks for the Poor? Distributional Consequences of Monetary Policy. September 19, 2014
Doves for the Rich, Hawks for the Poor? Distributional Consequences of Monetary Policy Nils Gornemann 1 Keith Kuester 2 Makoto Nakajima 3 1 Board of Governors 2 University of Bonn 3 Federal Reserve Bank
More informationMonetary Economics. Financial Markets and the Business Cycle: The Bernanke and Gertler Model. Nicola Viegi. September 2010
Monetary Economics Financial Markets and the Business Cycle: The Bernanke and Gertler Model Nicola Viegi September 2010 Monetary Economics () Lecture 7 September 2010 1 / 35 Introduction Conventional Model
More informationRisky Mortgages in a DSGE Model
1 / 29 Risky Mortgages in a DSGE Model Chiara Forlati 1 Luisa Lambertini 1 1 École Polytechnique Fédérale de Lausanne CMSG November 6, 21 2 / 29 Motivation The global financial crisis started with an increase
More informationCredit Frictions and Optimal Monetary Policy. Vasco Curdia (FRB New York) Michael Woodford (Columbia University)
MACRO-LINKAGES, OIL PRICES AND DEFLATION WORKSHOP JANUARY 6 9, 2009 Credit Frictions and Optimal Monetary Policy Vasco Curdia (FRB New York) Michael Woodford (Columbia University) Credit Frictions and
More informationSamba: Stochastic Analytical Model with a Bayesian Approach. DSGE Model Project for Brazil s economy
Samba: Stochastic Analytical Model with a Bayesian Approach DSGE Model Project for Brazil s economy Working in Progress - Preliminary results Solange Gouvea, André Minella, Rafael Santos, Nelson Souza-Sobrinho
More informationChapter 6 Money, Inflation and Economic Growth
George Alogoskoufis, Dynamic Macroeconomic Theory, 2015 Chapter 6 Money, Inflation and Economic Growth In the models we have presented so far there is no role for money. Yet money performs very important
More informationINTERTEMPORAL ASSET ALLOCATION: THEORY
INTERTEMPORAL ASSET ALLOCATION: THEORY Multi-Period Model The agent acts as a price-taker in asset markets and then chooses today s consumption and asset shares to maximise lifetime utility. This multi-period
More information. Social Security Actuarial Balance in General Equilibrium. S. İmrohoroğlu (USC) and S. Nishiyama (CBO)
....... Social Security Actuarial Balance in General Equilibrium S. İmrohoroğlu (USC) and S. Nishiyama (CBO) Rapid Aging and Chinese Pension Reform, June 3, 2014 SHUFE, Shanghai ..... The results in this
More informationNew Business Start-ups and the Business Cycle
New Business Start-ups and the Business Cycle Ali Moghaddasi Kelishomi (Joint with Melvyn Coles, University of Essex) The 22nd Annual Conference on Monetary and Exchange Rate Policies Banking Supervision
More informationState-Dependent Pricing and the Paradox of Flexibility
State-Dependent Pricing and the Paradox of Flexibility Luca Dedola and Anton Nakov ECB and CEPR May 24 Dedola and Nakov (ECB and CEPR) SDP and the Paradox of Flexibility 5/4 / 28 Policy rates in major
More informationState Dependency of Monetary Policy: The Refinancing Channel
State Dependency of Monetary Policy: The Refinancing Channel Martin Eichenbaum, Sergio Rebelo, and Arlene Wong May 2018 Motivation In the US, bulk of household borrowing is in fixed rate mortgages with
More informationMacroeconomics Qualifying Examination
Macroeconomics Qualifying Examination January 211 Department of Economics UNC Chapel Hill Instructions: This examination consists of three questions. Answer all questions. Answering only two questions
More informationConvergence of Life Expectancy and Living Standards in the World
Convergence of Life Expectancy and Living Standards in the World Kenichi Ueda* *The University of Tokyo PRI-ADBI Joint Workshop January 13, 2017 The views are those of the author and should not be attributed
More informationLeverage Restrictions in a Business Cycle Model. March 13-14, 2015, Macro Financial Modeling, NYU Stern.
Leverage Restrictions in a Business Cycle Model Lawrence J. Christiano Daisuke Ikeda Northwestern University Bank of Japan March 13-14, 2015, Macro Financial Modeling, NYU Stern. Background Wish to address
More informationMacroeconomics of Bank Capital and Liquidity Regulations
Macroeconomics of Bank Capital and Liquidity Regulations Authors: Frederic Boissay and Fabrice Collard Discussion by: David Martinez-Miera UC3M & CEPR Financial Stability Conference Martinez-Miera (UC3M
More informationKeynesian Views On The Fiscal Multiplier
Faculty of Social Sciences Jeppe Druedahl (Ph.d. Student) Department of Economics 16th of December 2013 Slide 1/29 Outline 1 2 3 4 5 16th of December 2013 Slide 2/29 The For Today 1 Some 2 A Benchmark
More informationHome Production and Social Security Reform
Home Production and Social Security Reform Michael Dotsey Wenli Li Fang Yang Federal Reserve Bank of Philadelphia SUNY-Albany October 17, 2012 Dotsey, Li, Yang () Home Production October 17, 2012 1 / 29
More informationStructural Reforms in a Debt Overhang
in a Debt Overhang Javier Andrés, Óscar Arce and Carlos Thomas 3 9/5/5 - Birkbeck Center for Applied Macroeconomics Universidad de Valencia, Banco de España Banco de España 3 Banco de España 9/5/5 - Birkbeck
More informationExercises on chapter 4
Exercises on chapter 4 Exercise : OLG model with a CES production function This exercise studies the dynamics of the standard OLG model with a utility function given by: and a CES production function:
More informationMonetary Economics Basic Flexible Price Models
Monetary Economics Basic Flexible Price Models Nicola Viegi July 26, 207 Modelling Money I Cagan Model - The Price of Money I A Modern Classical Model (Without Money) I Money in Utility Function Approach
More informationThe Role of Labour Markets for Fiscal Policy Transmission
The Role of Labour Markets for Fiscal Policy Transmission Meri Obstbaum y Aalto University School of Economics, Helsinki September 1, 2010 Abstract This paper identi es how frictions in the labour market
More informationThe science of monetary policy
Macroeconomic dynamics PhD School of Economics, Lectures 2018/19 The science of monetary policy Giovanni Di Bartolomeo giovanni.dibartolomeo@uniroma1.it Doctoral School of Economics Sapienza University
More informationCalvo Wages in a Search Unemployment Model
DISCUSSION PAPER SERIES IZA DP No. 2521 Calvo Wages in a Search Unemployment Model Vincent Bodart Olivier Pierrard Henri R. Sneessens December 2006 Forschungsinstitut zur Zukunft der Arbeit Institute for
More informationBernanke and Gertler [1989]
Bernanke and Gertler [1989] Econ 235, Spring 2013 1 Background: Townsend [1979] An entrepreneur requires x to produce output y f with Ey > x but does not have money, so he needs a lender Once y is realized,
More informationNews Shocks and Asset Price Volatility in a DSGE Model
News Shocks and Asset Price Volatility in a DSGE Model Akito Matsumoto 1 Pietro Cova 2 Massimiliano Pisani 2 Alessandro Rebucci 3 1 International Monetary Fund 2 Bank of Italy 3 Inter-American Development
More informationFiscal policy: Ricardian Equivalence, the e ects of government spending, and debt dynamics
Roberto Perotti November 20, 2013 Version 02 Fiscal policy: Ricardian Equivalence, the e ects of government spending, and debt dynamics 1 The intertemporal government budget constraint Consider the usual
More information