A Simple Way to Overcome the Zero Lower Bound of Interest Rates
... the opportunity cost of leaving it at the bank account. Since holding cash is costless if it is not taxed, the nominal interest cannot be lower than zero. However, with a tax it could. But we do not observe that governments tax money holdings within the current crisis, so this seems not to be the wa ...
... the opportunity cost of leaving it at the bank account. Since holding cash is costless if it is not taxed, the nominal interest cannot be lower than zero. However, with a tax it could. But we do not observe that governments tax money holdings within the current crisis, so this seems not to be the wa ...
The New IS-LM Model: Language, Logic, and Limits
... While the initial IS-LM model did not determine how the price level evolved through time, the addition of a price equation—or a wage/price block that featured a Phillips (1958) curve—made it possible to explore the implications for inflation.1 The simultaneous occurrence of high inflation and high u ...
... While the initial IS-LM model did not determine how the price level evolved through time, the addition of a price equation—or a wage/price block that featured a Phillips (1958) curve—made it possible to explore the implications for inflation.1 The simultaneous occurrence of high inflation and high u ...
Understanding Inflation and the Implications for
... the most serious flaw in arguments for an exploitable inflation-unemployment trade-off: surely labor markets would operate so that nominal wages relative to price inflation were relatively high when excess demand for labor was large, and vice versa.3 Friedman traced out the mechanisms ...
... the most serious flaw in arguments for an exploitable inflation-unemployment trade-off: surely labor markets would operate so that nominal wages relative to price inflation were relatively high when excess demand for labor was large, and vice versa.3 Friedman traced out the mechanisms ...
Globak Slack and Domestic Inflation Rates: A
... differentiated goods, by allowing it to vary with the firm’s relative market share. It is through its effect on market shares and hence on the elasticity of demand that globalization may affect the slope of the Phillips curve in her closed economy model. This paper works, instead, with an open econo ...
... differentiated goods, by allowing it to vary with the firm’s relative market share. It is through its effect on market shares and hence on the elasticity of demand that globalization may affect the slope of the Phillips curve in her closed economy model. This paper works, instead, with an open econo ...
NBER WORKING PAPER SERIES TECHNOLOGY SHOCKS IN THE NEW KEYNESIAN MODEL
... JEL No. E32 ABSTRACT In the New Keynesian model, preference, cost-push, and monetary shocks all compete with the real business cycle model's technology shock in driving aggregate fluctuations. A version of this model, estimated via maximum likelihood, points to these other shocks as being more impor ...
... JEL No. E32 ABSTRACT In the New Keynesian model, preference, cost-push, and monetary shocks all compete with the real business cycle model's technology shock in driving aggregate fluctuations. A version of this model, estimated via maximum likelihood, points to these other shocks as being more impor ...
money market
... FIGURE 27.8 The Effect of an Increase in Government Purchases or a Decrease in Net Taxes on the AD Curve An increase in government purchases (G) or a decrease in net taxes (T) causes the aggregate demand curve to shift to the right, from AD0 to AD1. The increase in G increases planned aggregate ex ...
... FIGURE 27.8 The Effect of an Increase in Government Purchases or a Decrease in Net Taxes on the AD Curve An increase in government purchases (G) or a decrease in net taxes (T) causes the aggregate demand curve to shift to the right, from AD0 to AD1. The increase in G increases planned aggregate ex ...
NBER WORKING PAPER SERIES US AFTER 2001 Lawrence Christiano
... that comparisons based on such simple metrics are misleading. Comparative assessments of monetary policies cannot abstract from a careful analysis of the shocks and the underlying economic structures that shape the macroeconomic landscape which central banks face. We concentrate on the most recent i ...
... that comparisons based on such simple metrics are misleading. Comparative assessments of monetary policies cannot abstract from a careful analysis of the shocks and the underlying economic structures that shape the macroeconomic landscape which central banks face. We concentrate on the most recent i ...
Inflation Targeting with a backward Bending Phillips Curve
... with macro models that have a single aggregate labor market, and instead requires adoption of multi-sector labor markets. This gave the Friedman – Phelps approach a strategic advantage since it was compatible with single good – single labor market macro models that macroeconomists are familiar with ...
... with macro models that have a single aggregate labor market, and instead requires adoption of multi-sector labor markets. This gave the Friedman – Phelps approach a strategic advantage since it was compatible with single good – single labor market macro models that macroeconomists are familiar with ...
This PDF is a selection from an out-of-print volume from... of Economic Research
... conclude that “the volume remains unchallenged as a source of carefully constructed data for the years it covers,” that “it is the pioneering work in British . . . economic history,” and that the volume provides an important link between earlier approaches to the business cycle and current real busi ...
... conclude that “the volume remains unchallenged as a source of carefully constructed data for the years it covers,” that “it is the pioneering work in British . . . economic history,” and that the volume provides an important link between earlier approaches to the business cycle and current real busi ...
Oil Price Shocks, Monetary Policy and Stagflation
... fluctuations in global real activity, because the demand for industrial commodities is tied to the state of the global business cycle. To the extent that the increases in global liquidity in the early and mid 1970s fostered a global output boom, they also drove up the prices of oil and other industr ...
... fluctuations in global real activity, because the demand for industrial commodities is tied to the state of the global business cycle. To the extent that the increases in global liquidity in the early and mid 1970s fostered a global output boom, they also drove up the prices of oil and other industr ...
Chapter 9 The IS-LM/AD
... Suppose the intersection of the IS and LM curves is to the left of the FE line. What would most likely eliminate a disequilibrium among the asset, labor, and goods markets? (a) A rise in the price level, shifting the LM curve up and to the left (b) A fall in the price level, shifting the LM curve do ...
... Suppose the intersection of the IS and LM curves is to the left of the FE line. What would most likely eliminate a disequilibrium among the asset, labor, and goods markets? (a) A rise in the price level, shifting the LM curve up and to the left (b) A fall in the price level, shifting the LM curve do ...
M o n e t a r y ... Contents 1 May 2001
... ure 2). This season’s milk-fat production is expected to have been almost 6 per cent ahead of last year, with the ‘shoulder’ of the season providing over double the daily quantities processed last year. Moreover, this season’s Dairy Board payout may be as much as 40 per cent higher than last season’ ...
... ure 2). This season’s milk-fat production is expected to have been almost 6 per cent ahead of last year, with the ‘shoulder’ of the season providing over double the daily quantities processed last year. Moreover, this season’s Dairy Board payout may be as much as 40 per cent higher than last season’ ...
Adopting Inflation Targeting in Pakistan
... The idea behind inflation targeting (IT) goes back to the early Keynesian-monetarist debate on rules versus discretion. The central bank announces one long-term target but not its technical or mechanical operating instructions. It requires structural and judgmental models of ...
... The idea behind inflation targeting (IT) goes back to the early Keynesian-monetarist debate on rules versus discretion. The central bank announces one long-term target but not its technical or mechanical operating instructions. It requires structural and judgmental models of ...
Inflation Targeting in South Africa: A VAR Analysis
... can ignore the inflation target because of adverse consequences of achieving the target (e.g., hitting an inflation target in the face of an adverse supply shock; see Masson et al (1997) for a description of specific procedures). The variety of institutional procedures that have been adopted to prov ...
... can ignore the inflation target because of adverse consequences of achieving the target (e.g., hitting an inflation target in the face of an adverse supply shock; see Masson et al (1997) for a description of specific procedures). The variety of institutional procedures that have been adopted to prov ...
inflation and the federal reserve system large
... challenges for monetary theory and policy and has revived some old ones. The present dissertation concentrates its analysis in one of the Federal Reserve System (the central bank of the US) response to the crisis, which is Large-Scale Asset Purchases (henceforth LSAPs). By applying LSAPs the Federal ...
... challenges for monetary theory and policy and has revived some old ones. The present dissertation concentrates its analysis in one of the Federal Reserve System (the central bank of the US) response to the crisis, which is Large-Scale Asset Purchases (henceforth LSAPs). By applying LSAPs the Federal ...
NBER WORKING PAPER SERIES Frederic S. Mishkin Working Paper 13566
... countries in the Organisation for Economic Co-operation and Development (OECD) experiencing double-digit inflation rates (figure 1). Most OECD countries today have inflation rates around the 2 percent level, which is consistent with what most economists see as price stability, and the volatility of ...
... countries in the Organisation for Economic Co-operation and Development (OECD) experiencing double-digit inflation rates (figure 1). Most OECD countries today have inflation rates around the 2 percent level, which is consistent with what most economists see as price stability, and the volatility of ...
Review Questions and Answers for Chapter 11
... economy? Why can’t the supply and demand model for a single product explain developments in the economy? The basic reason for an aggregate model is that there are thousands of individual products in an economy. Single product supply and demand model does not explain: (1) why prices in general rise o ...
... economy? Why can’t the supply and demand model for a single product explain developments in the economy? The basic reason for an aggregate model is that there are thousands of individual products in an economy. Single product supply and demand model does not explain: (1) why prices in general rise o ...
Chapter 7: Putting All Markets Together: The AS
... In the aggregate demand equation, we can see that an increase in nominal money, M, leads to an increase in the real money stock, M/P, leading to an increase in output. The aggregate demand curve shifts to the right. ...
... In the aggregate demand equation, we can see that an increase in nominal money, M, leads to an increase in the real money stock, M/P, leading to an increase in output. The aggregate demand curve shifts to the right. ...
Chapter 1: Introduction
... So far in this book one of our six key economic variables, the unemployment rate, has been largely absent. In Section II, the long-run growth section, unemployment was not a significant factor. In Section III, the flexible-price macroeconomic model section, there were no fluctuations in unemployment ...
... So far in this book one of our six key economic variables, the unemployment rate, has been largely absent. In Section II, the long-run growth section, unemployment was not a significant factor. In Section III, the flexible-price macroeconomic model section, there were no fluctuations in unemployment ...
Sticky Leverage Joao Gomes, Urban Jermann and Lukas Schmid February 23, 2016
... numerical approach that allows the analysis of model dynamics with perturbation techniques, and as such alleviates the curse of dimensionality of fully nonlinear global methods.5 Other macro economic analyses with long-term debt and default include Gomes and Schmid (2013) and Miao and Wang (2010). I ...
... numerical approach that allows the analysis of model dynamics with perturbation techniques, and as such alleviates the curse of dimensionality of fully nonlinear global methods.5 Other macro economic analyses with long-term debt and default include Gomes and Schmid (2013) and Miao and Wang (2010). I ...
Sticky Leverage Joao Gomes, Urban Jermann and Lukas Schmid October 14, 2014
... numerical approach that allows the analysis of model dynamics with perturbation techniques, and as such alleviates the curse of dimensionality of fully nonlinear global methods.5 Other macro economic analyses with long-term debt and default include Gomes and Schmid (2013) and Miao and Wang (2010). I ...
... numerical approach that allows the analysis of model dynamics with perturbation techniques, and as such alleviates the curse of dimensionality of fully nonlinear global methods.5 Other macro economic analyses with long-term debt and default include Gomes and Schmid (2013) and Miao and Wang (2010). I ...
Chapter 12: Aggregate Demand and Aggregate Supply Analysis
... If increases in the PL turn out to be unexpected high, the union will take this into account when negotiating the next contract. The higher wages under the new contract will increase the company’s costs and result in the company’s needing to receive higher prices to produce the same quantity. ...
... If increases in the PL turn out to be unexpected high, the union will take this into account when negotiating the next contract. The higher wages under the new contract will increase the company’s costs and result in the company’s needing to receive higher prices to produce the same quantity. ...