Showing 1 - 10 of 28
We present a dynamic over-the-counter model of the fed funds market, and use it to study the determination of the fed funds rate, the volume of loans traded, and the intraday evolution of the distribution of reserve balances across banks. We also investigate the implications of changes in the...
Persistent link: https://www.econbiz.de/10010227278
Wealthier individuals have stronger incentives to seek higher returns. We investigate theoretically the effect this has on long-run wealth inequality. Incorporating capital management into a standard RamseyCass-Koopmans model generates substantial long-run inequality: the majority of the...
Persistent link: https://www.econbiz.de/10014343037
The recent nonexperimental literature on social learning focuses on showing that observational learning exists, that is, individuals do indeed draw inferences by observing the actions of others. We take this literature a step further by analyzing whether individuals are Bayesian social learners....
Persistent link: https://www.econbiz.de/10008657261
This paper examines how the scale and composition of public debt can affect economies that implement a combination of "passive" monetary policy and "active" fiscal policy. This policy configuration is argued to be of both historical and contemporary interest in the cases of the U.S. and Japanese...
Persistent link: https://www.econbiz.de/10009347987
We study the term structure of disagreement of professional forecasters for key macroeconomic variables. We document a novel set of facts: 1) forecasters disagree at all horizons, including the very long run; 2) the shape of the term structure of disagreement differs markedly across variables:...
Persistent link: https://www.econbiz.de/10010222893
This paper proposes a theory of the fiscal foundations of inflation based on imperfect knowledge and learning. The theory is similar in spirit to, but distinct from, unpleasant monetarist arithmetic and the fiscal theory of the price level. Because the assumption of imperfect knowledge breaks...
Persistent link: https://www.econbiz.de/10010202656
Under rational expectations, monetary policy is generally highly effective in stabilizing the economy. Aggregate demand management operates through the expectations hypothesis of the term structure: Anticipated movements in future short-term interest rates control current demand. This paper...
Persistent link: https://www.econbiz.de/10009522772
have to search for a suitable counterparty, and once they have met, both parties negotiate the size of the loan and the … ; search ; bargaining ; over-the-counter …
Persistent link: https://www.econbiz.de/10009526864
We provide a preference-based rationale for endogenous overconfidence. Horizon-dependent risk aversion, combined with a possibility to forget, can generate overconfidence and excessive risk taking in equilibrium. An "anxiety prone" agent, who is more risk-averse to imminent than to distant...
Persistent link: https://www.econbiz.de/10010482950
Central bank communication plays an important role in shaping market participants’ expectations. This paper studies a simple nonlinear model of monetary policy in which agents have incomplete information about the economic environment. It shows that agents’ learning and the dynamics of the...
Persistent link: https://www.econbiz.de/10003781685