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We use annual data drawn from 1950-85 to estimate an econometric model of the money multiplier for the United Kingdom. We define the money multiplier as ratio of the money stock broadly defined (M3) and the monetary base (M0), and then decompose the multiplier into the currency ratio, the time...
Persistent link: https://www.econbiz.de/10005497753
We study the role of institutional characteristics of mortgage markets in affecting the strength and timing of the … facts: (1) there is significant divergence in the structure of mortgage markets across the main industrialized countries; (2 … flexibility/development of mortgage markets; (3) the transmission of monetary policy shocks on consumption and house prices is …
Persistent link: https://www.econbiz.de/10005123820
This paper gives money a role in providing cheap collateral in a model of banking; this means that, besides the Taylor …
Persistent link: https://www.econbiz.de/10011084208
The New-Keynesian Taylor-Rule model of inflation determination with no role for money is incomplete. As Cochrane (2007a, b) argues, it has no credible mechanism for ruling out bubbles (or deal with the non-uniqueness problem that arises when the Taylor principle is violated) and as a result...
Persistent link: https://www.econbiz.de/10008466336
The Friedman rule states that steady-state welfare is maximized when there is deflation at the real rate of interest. Recent work by Khan et al. (2003) uses a richer model but still finds deflation optimal. In an otherwise standard new Keynesian model we show that, if households have hyperbolic...
Persistent link: https://www.econbiz.de/10009643503
Is there a link between loose monetary conditions, credit growth, house price booms, and financial instability? This paper analyzes the role of interest rates and credit in driving house price booms and busts with data spanning 140 years of modern economic history in the advanced economies. We...
Persistent link: https://www.econbiz.de/10011145419
This paper reviews the monetary transmission mechanism in low income countries (LICs). We use monetary transmission in advanced and emerging markets as a benchmark to identify aspects of the transmission mechanism that may operate differently in LICs. In particular, we focus on the effects of...
Persistent link: https://www.econbiz.de/10008466328
the other. We argue that, even when durable prices are flexible, the introduction of a collateral constraint on borrowing … and the consideration of durables as collateral assets generate both a correct sectoral co-movement and a procyclical … response of durable consumption to policy shocks. In this vein, collateral constraints act as a substitute of nominal rigidity …
Persistent link: https://www.econbiz.de/10005791335
, housing, credit frictions and a Taylor rule. Highly leveraged borrowing through nominal debt backed by real estate collateral …
Persistent link: https://www.econbiz.de/10008921771
Due to the severity of the financial market crisis most central banks reached the limits of their traditional monetary policy instruments and relied to a very large extent on instruments of unconventional monetary policy. In our paper we develop a simple theoretical framework for the money...
Persistent link: https://www.econbiz.de/10008468505