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The paper considers the response of a small, open dependent economy to a variety of fiscal and financial shocks as well …
Persistent link: https://www.econbiz.de/10012477047
The paper develops a forward-looking comprehensive accounting framework for the public sector.By integrating the public sector budget constraint forward in time the government's present value budget constraint (PVBC) is obtained. In addition to the familiar financial assets and liabilities,...
Persistent link: https://www.econbiz.de/10012477762
If price decisions are taken neither continuously nor in perfect synchronization, the process of adjustment of all prices to a new nominal level will imply temporary movements in relative prices. It might then well be that, to avoid these movements in relative prices, each price setter will want...
Persistent link: https://www.econbiz.de/10012478207
Sargent and Wallace (S-W) show that, even when inflation is prima facie a strictly monetary phenomenon -- prices are flexible, markets clear and velocity is constant -- inflation is, in the long run, a fiscal phenomenon. This follows from the government budget constraint and the existence of an...
Persistent link: https://www.econbiz.de/10012478244
The setup of the paper is as follows: Section I presents a fairly standard, small deterministic macromodel with a number of classical features. All markets clear instantaneously, there is no money illusion, and perfect foresight rules. The effects of monetary, financial, and fiscal policies in...
Persistent link: https://www.econbiz.de/10012478735
Persistent link: https://www.econbiz.de/10010466885
The interplay between banks and the macroeconomy is of key importance for financial and economic stability. We analyze this link using a factor-augmented vector autoregressive model (FAVAR) which extends a standard VAR for the U.S. macroeconomy. The model includes GDP growth, inflation, the...
Persistent link: https://www.econbiz.de/10008697545
Persistent link: https://www.econbiz.de/10011927726
Discussions of monetary policy rules after the 2007-2009 recession highlight the potential ineffectiveness of a central bank's actions when the short-term interest rate under its control is limited by the zero lower bound. This perspective assumes, in a manner consistent with the canonical New...
Persistent link: https://www.econbiz.de/10012455524
interest in the cross-country effects of a large open economy's deficits. We consider a dynamic optimising model with costly …
Persistent link: https://www.econbiz.de/10009130177