Showing 1 - 5 of 5
drops can be a useful stabilization tool during a liquidity trap. With commitment, even with balance sheet constraints …
Persistent link: https://www.econbiz.de/10014247967
We propose a political economy mechanism that explains the presence of fiscal regimes punctuated by crisis periods. Our model focuses on the interaction between successive deficit-biased governments subject to i.i.d. fiscal shocks. We show that the economy transitions between a fiscally...
Persistent link: https://www.econbiz.de/10013435163
Financial integration generates macroeconomic spillovers that may require international monetary policy coordination. We show that individual central banks may set nominal interest rates too low or too high relative to the cooperative outcome. We identify three sufficient statistics that...
Persistent link: https://www.econbiz.de/10014447329
This paper studies the implications of central bank credibility for long-run inflation and inflation dynamics. We introduce central bank lack of commitment into a standard non-linear New Keynesian economy with sticky-price monopolistically competitive firms. Inflation is driven by the...
Persistent link: https://www.econbiz.de/10014287308
We present a simple long-run aggregate demand and supply framework for evaluating long-run inflation. The framework illustrates how exogenous economic and political economy factors generate central bank pressures that can impact long-run inflation as well as transitions between steady states. We...
Persistent link: https://www.econbiz.de/10014528348