Using Policy to Stabilize the Economy
... the resulting shift in aggregate demand can be larger or smaller than the fiscal change: The multiplier effect tends to amplify the effects of fiscal policy on aggregate demand. The crowding-out effect tends to dampen the effects of fiscal policy on aggregate demand. ...
... the resulting shift in aggregate demand can be larger or smaller than the fiscal change: The multiplier effect tends to amplify the effects of fiscal policy on aggregate demand. The crowding-out effect tends to dampen the effects of fiscal policy on aggregate demand. ...
del06 tirelli 2762910 en
... a contribution to the optimal taxation problem. However, in order to derive a linear-quadratic optimal policy problem and focus on analytical solutions the model neglects the existence of non-Ricardian consumers. Galì and Monacelli (2005) analyse fiscal policy within a monetary union, with a large n ...
... a contribution to the optimal taxation problem. However, in order to derive a linear-quadratic optimal policy problem and focus on analytical solutions the model neglects the existence of non-Ricardian consumers. Galì and Monacelli (2005) analyse fiscal policy within a monetary union, with a large n ...
The Role of Expectations in the FRB/US Macroeconomic Model
... individuals form expectations and thus about the way to model them. For example, the conventional view is that current consumption spending depends partly on how large or small consumers expect their future income to be. But economists are not in accord over exactly what information consumers take i ...
... individuals form expectations and thus about the way to model them. For example, the conventional view is that current consumption spending depends partly on how large or small consumers expect their future income to be. But economists are not in accord over exactly what information consumers take i ...
NBER WORKING PAPER SERIES ADJUSTING DEPRECIATION IN AN INFLATIONARY
... with respect to their relative price.3 If the supply of funds is perfectly 1To take an extreme example, consider an investment with a one year life, a net cost of $100 and a rate of return of 10 percent. A 5 percent increase in the net cost cuts the return in half while a 10 percent increase in net ...
... with respect to their relative price.3 If the supply of funds is perfectly 1To take an extreme example, consider an investment with a one year life, a net cost of $100 and a rate of return of 10 percent. A 5 percent increase in the net cost cuts the return in half while a 10 percent increase in net ...
NBER WORKING PAPER SERIES INFLATION: THEORY AND EVIDENCE Bennett 1. McCallum
... equilibrium model in which agents are depicted as solving dynamic optimization problems. Steady-state equilibria then emerge as special cases of more general dynamic equilibria. This procedure lessens the -danger that agents' optimization problems are posed in a restrictive manner. ...
... equilibrium model in which agents are depicted as solving dynamic optimization problems. Steady-state equilibria then emerge as special cases of more general dynamic equilibria. This procedure lessens the -danger that agents' optimization problems are posed in a restrictive manner. ...
Inflation: Its Causes and Cures Inflation • Introduction
... Figure 8-3 The Adjustment Path of Inflation and Real GDP to an Acceleration of Nominal GDP Growth from Zero to 6 Percent When Expectations Fails to Adjust ...
... Figure 8-3 The Adjustment Path of Inflation and Real GDP to an Acceleration of Nominal GDP Growth from Zero to 6 Percent When Expectations Fails to Adjust ...
2. The Sacrifice Ratio - Hal-SHS
... reduction of inflation. The issue of the transitory output cost associated with a restrictive monetary policy remains an endless debate among economists. Recent theoretical studies have focused on the key determinants of disinflation costs: the lack of central bank credibility, slow adjustments of i ...
... reduction of inflation. The issue of the transitory output cost associated with a restrictive monetary policy remains an endless debate among economists. Recent theoretical studies have focused on the key determinants of disinflation costs: the lack of central bank credibility, slow adjustments of i ...
Chapter 26
... a. Incorrect. The belief that the velocity of money is not constant but highly predictable is associated with the monetarist school. b. Incorrect. The belief that the velocity of money is not constant but highly predictable is associated with the monetarist school. c. Incorrect. The belief that the ...
... a. Incorrect. The belief that the velocity of money is not constant but highly predictable is associated with the monetarist school. b. Incorrect. The belief that the velocity of money is not constant but highly predictable is associated with the monetarist school. c. Incorrect. The belief that the ...
Overall effect: Y
... rates following fiscal expansion, and the extent of the crowding-out effect depends on the slopes of the IS- and LM-curves. The flatter the IS-curve and the steeper the LM-curve, the larger the crowding-out effect. The factors that determine the slopes of the IS- and LM-curves have already been disc ...
... rates following fiscal expansion, and the extent of the crowding-out effect depends on the slopes of the IS- and LM-curves. The flatter the IS-curve and the steeper the LM-curve, the larger the crowding-out effect. The factors that determine the slopes of the IS- and LM-curves have already been disc ...
NBER WORKING PAPER SERIES FISCAL FRAGILITY: Joshua Aizenman
... The global crisis has brought to the fore the fiscal vulnerabilities of OECD countries. There is a growing recognition of the fiscal vulnerabilities of some countries of the Euro block (Greece, Portugal, Spain, Italy, Ireland and others). The ability of the US to obtain relatively cheap funding of ...
... The global crisis has brought to the fore the fiscal vulnerabilities of OECD countries. There is a growing recognition of the fiscal vulnerabilities of some countries of the Euro block (Greece, Portugal, Spain, Italy, Ireland and others). The ability of the US to obtain relatively cheap funding of ...
Document
... elect to cover the appendix (Money Creation and Monetary Policy), another session or two will be required. In defining inflation, it is important that students understand that inflation is a continuing, or long-run, phenomenon. Once-and-for-all increases in the price level are excluded because no po ...
... elect to cover the appendix (Money Creation and Monetary Policy), another session or two will be required. In defining inflation, it is important that students understand that inflation is a continuing, or long-run, phenomenon. Once-and-for-all increases in the price level are excluded because no po ...
Mankiw 5/e Chapter 4: Money and Inflation
... 1. Money the stock of assets used for transactions serves as a medium of exchange, store of value, and unit of account. Commodity money has intrinsic value, fiat money does not. Central bank controls money supply. 2. Quantity theory of money assumption: velocity is stable conclusion: the ...
... 1. Money the stock of assets used for transactions serves as a medium of exchange, store of value, and unit of account. Commodity money has intrinsic value, fiat money does not. Central bank controls money supply. 2. Quantity theory of money assumption: velocity is stable conclusion: the ...
Optimal fiscal and monetary policy in a medium
... nominal government liabilities. This is indeed the reason why in flexible price environments the optimal inflation volatility is very high (see, for example, Calvo and Guidotti, 1990, 1993; and Chari et al. 1991). Second, the fact that nominal wages are sticky provides an incentive for the governmen ...
... nominal government liabilities. This is indeed the reason why in flexible price environments the optimal inflation volatility is very high (see, for example, Calvo and Guidotti, 1990, 1993; and Chari et al. 1991). Second, the fact that nominal wages are sticky provides an incentive for the governmen ...
Effectiveness of the Australian Fiscal Stimulus Package
... (2010) uses national accounts data to study whether the package helped Australia to remain economically prosperous in the face of the GFC. Using a more structural analysis, this study provides new insights into the demand-boosting role, the redistributional and welfare implications of the stimulus p ...
... (2010) uses national accounts data to study whether the package helped Australia to remain economically prosperous in the face of the GFC. Using a more structural analysis, this study provides new insights into the demand-boosting role, the redistributional and welfare implications of the stimulus p ...
MARXIAN CRISIS THEORY AND THE POSTWAR U. S. ECONOMY
... to the government stimulation of demand by raising their prices at a faster rate in order to restore the rate of profit, rather than by increasing output and employment. In the 1980s, financial capitalists revolted against these higher rates of inflation, and have generally forced government to adop ...
... to the government stimulation of demand by raising their prices at a faster rate in order to restore the rate of profit, rather than by increasing output and employment. In the 1980s, financial capitalists revolted against these higher rates of inflation, and have generally forced government to adop ...
NBER WORKING PAPER SERIES TECHNOLOGY SHOCKS IN THE NEW KEYNESIAN MODEL
... intertemporal marginal rate of substitution. The household’s first-order conditions also include the budget constraint (1) with equality and an optimality condition for money holdings, which plays the role of the model’s money demand relationship. Under an interest rate rule for monetary policy like ...
... intertemporal marginal rate of substitution. The household’s first-order conditions also include the budget constraint (1) with equality and an optimality condition for money holdings, which plays the role of the model’s money demand relationship. Under an interest rate rule for monetary policy like ...
What`s so Great about the Great Moderation?
... Our study is motivated, in part, by the common wisdom that the Great Moderation is an unprecedented event. In contrast to that view, we present evidence of other periods in which even greater moderations have occurred. Following World War II, the volatilities of output growth and inflation in all o ...
... Our study is motivated, in part, by the common wisdom that the Great Moderation is an unprecedented event. In contrast to that view, we present evidence of other periods in which even greater moderations have occurred. Following World War II, the volatilities of output growth and inflation in all o ...
03/RT/2015 The macroeconomic effects of the Euro Area`s fiscal
... downturn caused by the world financial crisis, fiscal policy in the EA turned progressively more restrictive. According to estimates by the European Commission (2012b) which are reported in Table 1, spending cuts and tax increases accumulated to about 4% of annual Euro Area GDP from 2011 and 2013. T ...
... downturn caused by the world financial crisis, fiscal policy in the EA turned progressively more restrictive. According to estimates by the European Commission (2012b) which are reported in Table 1, spending cuts and tax increases accumulated to about 4% of annual Euro Area GDP from 2011 and 2013. T ...
Chapter 27
... Government gets revenue from inflation. Inflation Is a Tax You have $100 and you could buy 10 CDs ($10 each) today or hold the $100 as money. If the inflation rate is 5 percent a year, at the end of the year the 10 CDs will cost you $105. If you held $100 as money for the year, you have paid a tax o ...
... Government gets revenue from inflation. Inflation Is a Tax You have $100 and you could buy 10 CDs ($10 each) today or hold the $100 as money. If the inflation rate is 5 percent a year, at the end of the year the 10 CDs will cost you $105. If you held $100 as money for the year, you have paid a tax o ...
Paper - Department of Economics | Washington University in St. Louis
... One attractive feature of the financial sector model we use is that, if the shock to the collateral constraint that causes the recession is sufficiently large, the equilibrium real interest rate becomes negative for several periods.4 The reason is that savings must be reallocated to lower productivity ...
... One attractive feature of the financial sector model we use is that, if the shock to the collateral constraint that causes the recession is sufficiently large, the equilibrium real interest rate becomes negative for several periods.4 The reason is that savings must be reallocated to lower productivity ...
Has the Inclusion of Forward-Looking Statements in Monetary Policy
... central bank more transparent or simply more predictable. Our study focuses on the period 30 October 2000 to 31 May 2007. As is well documented in most central banking handbooks, transparency is considered a key component of an effective monetary policy framework (see, for example, ECB 2004). Transp ...
... central bank more transparent or simply more predictable. Our study focuses on the period 30 October 2000 to 31 May 2007. As is well documented in most central banking handbooks, transparency is considered a key component of an effective monetary policy framework (see, for example, ECB 2004). Transp ...
Comprehensive Assessment: Developments in Economic Activity
... F. Effects of the Decline in Real Interest Rates on Economic Activity and Prices As explained at the outset, the main transmission channel of QQE and "QQE with a Negative Interest Rate" is to push down real interest rates and thereby produce a positive impact on economic activity and prices (Chart ...
... F. Effects of the Decline in Real Interest Rates on Economic Activity and Prices As explained at the outset, the main transmission channel of QQE and "QQE with a Negative Interest Rate" is to push down real interest rates and thereby produce a positive impact on economic activity and prices (Chart ...
NBER WORKING PAPER SERIES WHY IS CAPiTAL SO IMMOBILE INTERNATIONALLY?: POSSIBLE
... rather than in their own country. if they are buying securities in their own country, they have easier access not only to firm—specific information but also to better forecasts about future government policies affecting the firm. As a result, when buying securities abroad in Ben--Porath (1980) argue ...
... rather than in their own country. if they are buying securities in their own country, they have easier access not only to firm—specific information but also to better forecasts about future government policies affecting the firm. As a result, when buying securities abroad in Ben--Porath (1980) argue ...
Lecture Notes on Macroeconomic Principles
... Real and Nominal Interest Rates Since bank accounts, bonds, automobile loans, and mortgages all make or require dollar payments at different points in time, the interest rates on these investments or loans must also be corrected for the effects of inflation to gauge their true economic significan ...
... Real and Nominal Interest Rates Since bank accounts, bonds, automobile loans, and mortgages all make or require dollar payments at different points in time, the interest rates on these investments or loans must also be corrected for the effects of inflation to gauge their true economic significan ...
Real-Time Estimation of Trend Output and Kevin J. Lansing *
... strongly significant regression coefficient on the lagged federal funds rate, even though the Fed in the model is not engaging in any interest rate smoothing. The average point estimate of the spurious regression coefficient is around 0.3 or 0.4, depending on the econometrician’s sample period and rule ...
... strongly significant regression coefficient on the lagged federal funds rate, even though the Fed in the model is not engaging in any interest rate smoothing. The average point estimate of the spurious regression coefficient is around 0.3 or 0.4, depending on the econometrician’s sample period and rule ...