Expectations Traps and Coordination Failures with Discretionary
... private agents are forward-looking their expectations, shaped by anticipations about future policy, influence how policy today is conducted. The discretionary policymaker’s Achilles heel is that when formulating policy it is unable to manage private sector expectations, and this inability, inherent ...
... private agents are forward-looking their expectations, shaped by anticipations about future policy, influence how policy today is conducted. The discretionary policymaker’s Achilles heel is that when formulating policy it is unable to manage private sector expectations, and this inability, inherent ...
The Effects of Fiscal Policy on Consumption and
... some of the initial puzzles of RBC models can be resolved by the inclusion of additional sources of shocks. However, Galı́ (1999) argues that, even if the model can replicate the unconditional moments of the data, it may provide a distorted picture of the economy’s response to each of the shocks. We ...
... some of the initial puzzles of RBC models can be resolved by the inclusion of additional sources of shocks. However, Galı́ (1999) argues that, even if the model can replicate the unconditional moments of the data, it may provide a distorted picture of the economy’s response to each of the shocks. We ...
(a) The Fed buys securities from a commercial bank
... 1) Gold and foreign exchange 2) U.S. government securities 3) Loans to banks ...
... 1) Gold and foreign exchange 2) U.S. government securities 3) Loans to banks ...
The characteristics of a monetary economy: a Keynes
... Schumpeter (1912) emphasises this point by distinguishing between a pure exchange economy and a capitalist economy. A pure exchange economy is one based on private property, on the division of labour and on free competition; such an economy always tends to replicate itself unchangingly, or is in any ...
... Schumpeter (1912) emphasises this point by distinguishing between a pure exchange economy and a capitalist economy. A pure exchange economy is one based on private property, on the division of labour and on free competition; such an economy always tends to replicate itself unchangingly, or is in any ...
spd04 Missale2 225568 en
... return dierentials for the choice of the debt instruments. In fact, if debt sustainability is on average ensured by a restrictive fiscal stance, minimizing the expected cost of debt service becomes less important than minimizing the risk that debt stabilization may fail because of large shocks to th ...
... return dierentials for the choice of the debt instruments. In fact, if debt sustainability is on average ensured by a restrictive fiscal stance, minimizing the expected cost of debt service becomes less important than minimizing the risk that debt stabilization may fail because of large shocks to th ...
My lecture
... • Unemployment is never zero. Full employment implies operating at the natural rate of unemployment. • Increases in the available money in an economic system lead to rising price level. • Inflation pushes up the nominal interest rate while real interest rate is determined as savings are matched with ...
... • Unemployment is never zero. Full employment implies operating at the natural rate of unemployment. • Increases in the available money in an economic system lead to rising price level. • Inflation pushes up the nominal interest rate while real interest rate is determined as savings are matched with ...
Inflation dynamics, marginal cost, and the output gap:
... rationalize a disturbance (or “cost-push shock”) term in empirical NKPCs, that is the basis for the existence for a trade-off between price inflation and output gap variability. We will argue that such a shock term can be rationalized even in the absence of labor market rigidities, once one consider ...
... rationalize a disturbance (or “cost-push shock”) term in empirical NKPCs, that is the basis for the existence for a trade-off between price inflation and output gap variability. We will argue that such a shock term can be rationalized even in the absence of labor market rigidities, once one consider ...
Endogenous Government Spending and Fiscal Stimulus
... spending effect. The most recent papers begin to concern the multiplier effect when an economy hits the zero nominal interest bound after the severe contraction that hit the U.S and the world economy in 2008. Christiano, Eichenbaum and Rebelo (2009) found the government spending multiplier increases ...
... spending effect. The most recent papers begin to concern the multiplier effect when an economy hits the zero nominal interest bound after the severe contraction that hit the U.S and the world economy in 2008. Christiano, Eichenbaum and Rebelo (2009) found the government spending multiplier increases ...
This PDF is a selection from an out-of-print volume from... of Economic Research
... liquidity. As nominal interest rates increase, the cost of holding nominal money balances rises, thereby shifting portfolio demand from money to real capital and putting downward pressure on interest rates (dr/dn < 1). Subsequent work by Darby (1975) and Feldstein (1976) argues that inflation is lik ...
... liquidity. As nominal interest rates increase, the cost of holding nominal money balances rises, thereby shifting portfolio demand from money to real capital and putting downward pressure on interest rates (dr/dn < 1). Subsequent work by Darby (1975) and Feldstein (1976) argues that inflation is lik ...
How Important Is the Inflation Risk Premium?
... Governments in many industrialized countries have accumulated huge amounts of debt due to years of deficit spending. For example, the U.S. government currently has more than $5 trillion of debt.10 Almost all government debt is financed with nominal bonds. In the United Kingdom, however, the governme ...
... Governments in many industrialized countries have accumulated huge amounts of debt due to years of deficit spending. For example, the U.S. government currently has more than $5 trillion of debt.10 Almost all government debt is financed with nominal bonds. In the United Kingdom, however, the governme ...
Monetary and Fiscal Policy with Sovereign Default
... essentially two options left: inflation and sovereign default. While default and inflation both can lower the real debt burden, there are several differences between these two policy options which make them imperfect substitutes. For example, a government can collect seigniorage when engineering inf ...
... essentially two options left: inflation and sovereign default. While default and inflation both can lower the real debt burden, there are several differences between these two policy options which make them imperfect substitutes. For example, a government can collect seigniorage when engineering inf ...
This PDF is a selection from an out-of-print volume from... of Economic Research
... While we have followed the above route for the sake of comparability with the other country studies in this volume, there is admittedly some uncertainty about the inflation rate that exactly constitutes price stability in the case of Spain. If, for example, it were to be considered that an inflation ...
... While we have followed the above route for the sake of comparability with the other country studies in this volume, there is admittedly some uncertainty about the inflation rate that exactly constitutes price stability in the case of Spain. If, for example, it were to be considered that an inflation ...
NBER WORKING PAPER SERIES GLOBALIZATION AND INFLATION DYNAMICS: Argia M. Sbordone
... finds evidence of a flatter curve and a higher sacrifice ratio in the samples that start in the 1990s relative to those estimated in the full sample. However, he also finds that in the more recent samples the unit sum restriction on the lag coefficients, which defines the accelerationist curve, is vio ...
... finds evidence of a flatter curve and a higher sacrifice ratio in the samples that start in the 1990s relative to those estimated in the full sample. However, he also finds that in the more recent samples the unit sum restriction on the lag coefficients, which defines the accelerationist curve, is vio ...
Inflation, Its Causes and Cures
... level should be kept approximately stable for the long run does not mean that the price level· should never be allowed to decline. The reason is very simple. It will hardly be possible, even apart fromwar and periods of acute international tension requiring large defense expenditure, to avoid period ...
... level should be kept approximately stable for the long run does not mean that the price level· should never be allowed to decline. The reason is very simple. It will hardly be possible, even apart fromwar and periods of acute international tension requiring large defense expenditure, to avoid period ...
Monetary policy
Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting an inflation rate or interest rate to ensure price stability and general trust in the currency.Further goals of a monetary policy are usually to contribute to economic growth and stability, to lower unemployment, and to maintain predictable exchange rates with other currencies.Monetary economics provides insight into how to craft optimal monetary policy.Monetary policy is referred to as either being expansionary or contractionary, where an expansionary policy increases the total supply of money in the economy more rapidly than usual, and contractionary policy expands the money supply more slowly than usual or even shrinks it. Expansionary policy is traditionally used to try to combat unemployment in a recession by lowering interest rates in the hope that easy credit will entice businesses into expanding. Contractionary policy is intended to slow inflation in order to avoid the resulting distortions and deterioration of asset values.Monetary policy differs from fiscal policy, which refers to taxation, government spending, and associated borrowing.