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Romer, Christina D.; Romer, David H. - 2022

This paper analyzes the contributions of monetary and fiscal policy to postwar economic recoveries. We find that the Federal Reserve typically responds to downturns with prompt and large reductions in interest rates. Discretionary fiscal policy, in contrast, rarely reacts before the trough in...

Persistent link: https://www.econbiz.de/10013309225

A Model of the Safe Asset Mechanism (Sam) : Safety Traps and Economic Policy

Caballero, Ricardo J. - 2013

The global economy has a chronic shortage of safe assets which lies behind many recent macroeconomic imbalances. This ….) that support future bad states of the economy play a central role in the SAM environment, while policy-calls that support …

Persistent link: https://www.econbiz.de/10013087881

The Evolution of Economic Understanding and Postwar Stabilization Policy

Romer, Christina D.; Romer, David H. - 2022

functioning of the economy and the effects of policy. We document the changes in beliefs using contemporaneous discussions of the … economy and policy by monetary and fiscal policymakers and, for the period since the late 1960s, using the Federal Reserve …'s internal forecasts. We find that policymakers' understanding of the economy has not exhibited steady improvement. Instead, the …

Persistent link: https://www.econbiz.de/10013322316

Understanding the Fiscal Theory of the Price Level

Christiano, Lawrence J.; Fitzgerald, Terry J. - 2021

Persistent link: https://www.econbiz.de/10013223567

A model of asset price spirals and aggregate demand amplification of a "Covid-19" shock

Caballero, Ricardo J.; Simsek, Alp - 2020

Persistent link: https://www.econbiz.de/10012230394

The Great Depression and the Friedman-Schwartz Hypothesis

Christiano, Lawrence J.; Motto, Roberto; Rostagno, Massimo - 2022

We evaluate the Friedman-Schwartz hypothesis that a more accommodative monetary policy could have greatly reduced the severity of the Great Depression. To do this, we first estimate a dynamic, general equilibrium model using data from the 1920s and 1930s. Although the model includes eight...

Persistent link: https://www.econbiz.de/10013309234

Fiscal Space and the Aftermath of Financial Crises : How it Matters and Why

Romer, Christina D. - 2019

In OECD countries over the period 1980–2017, countries with lower debt-to-GDP ratios responded to financial distress with much more expansionary fiscal policy and suffered much less severe aftermaths. Two lines of evidence together suggest that the relationship between the debt ratio and the...

Persistent link: https://www.econbiz.de/10012871942

Government Policy, Credit Markets and Economic Activity

Christiano, Lawrence J. - 2011

The US government has recently conducted large scale purchases of assets and implemented policies that reduced the cost of funds to financial institutions. Arguably these policies have helped to correct credit market dysfunctions, allowing interest rate spreads to shrink and output to begin a...

Persistent link: https://www.econbiz.de/10013123690

Fiscal Policy and Financial Depth

Caballero, Ricardo J.; Krishnamurthy, Arvind - 2021

Most economists and observers place the lack of fiscal discipline at the core of the recent Argentine crisis. This begs the question of how countries like Belgium or Italy (pre-Maastricht) could run large fiscal deficits and accumulate debts far beyond those of Argentina, without experiencing...

Persistent link: https://www.econbiz.de/10013233772

Optimal Fiscal Policy in a Business Cycle Model

Chari, Varadarajan V. - 2012

This paper develops the quantitative implications of optimal fiscal policy in a business cycle model. In a stationary equilibrium the ex ante tax rate on capital income is approximately zero. There is an equivalence class of ex post capital income tax rates and bond policies that support a given...

Persistent link: https://www.econbiz.de/10013114944