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Stable Sunspot Equilibria in a Cash-in-Advance Economy

Evans, George W.; Honkapohja, Seppo; Marimon, Ramon - CESifo - 2001

We develop a monetary model with flexible supply of labor, cash in advance constraints and government spending financed by seignorage. This model has two regimes. One regime is conventional with two steady states. The other regime has a unique steady state which can be determinate or...

Persistent link: https://www.econbiz.de/10005766279

Existence of Adaptively Stable Sunspot Equilibria Near an Indeterminate Steady State

Evans, George W.; Honkapohja, Seppo - CESifo - 2001

We examine the nonlinear model Xt = Et F(xt+1) . Markov SSEs exist near an indeterminate steady state, X = F(X), provided F´(X)> 1. We show that there exist Markov SSEs that are E-stable, and therefore locally stable under adaptive learning, if F´(X)< -1.

Persistent link: https://www.econbiz.de/10005196257

Expectational Stability of Resonant Frequency Sunspot Equilibria

Evans, George W.; Honkapohja, Seppo - CESifo - 2001

We consider the stability under adaptive learning of the complete set of solutions to the model when . In addition to the fundamentals solution, the literature describes both finite-state Markov sunspot solutions, satisfying a resonant frequency condition, and autoregressive solutions depending...

Persistent link: https://www.econbiz.de/10005196325

Stock Markets, Banks and Long Run Economics Growth: A Panel Cointegration-Based Analysis

Cavenaile, Laurent; Gengenbach, Christian; Palm, Franz - CESifo - 2013

the direction of potential causality between financial and economic development. Our results conclude to the existence of … a single cointegrating vector between financial development and growth and of causality going from financial development … to economic growth. We find little evidence of reverse causation as well as bi-directional causality. We interpret this …

Persistent link: https://www.econbiz.de/10010723543

Transparency, Flexibility and Macroeconomic Stabilization

Geraats, Petra - CESifo - 2014

Many central banks have become more transparent during the last decade, in particular about macroeconomic prospects. This paper shows that such economic transparency could give central banks greater flexibility to respond to macroeconomic shocks. In particular, it allows central banks to...

Persistent link: https://www.econbiz.de/10010877697

The Tragedy of the Commons and Inflation Bias in the Euro Area

Dinger, Valeriya; Steinkamp, Sven; Westermann, Frank - CESifo - 2012

Central bank credit has expanded dramatically in some of the euro area member countries since the beginning of the financial crisis. This paper makes two contributions to understand this stylized fact. First, we discuss a simple model of monetary policy that includes (i) a credit channel and...

Persistent link: https://www.econbiz.de/10010877778

Renewed Momentum in the German Housing Market: Boom or Bubble?

Chen, Xi; Funke, Michael - CESifo - 2013

The renewed momentum in the German housing market has led to concerns that Germany is vulnerable to asset price shocks. In this paper, we apply recently developed recursive unit root tests to detect the beginning and the end of potential speculative bubbles in Germany over the sample period...

Persistent link: https://www.econbiz.de/10010877826

The Interest Rate Pass-Through in the Euro Area During the Global Financial Crisis

Hristov, Nikolay; Hülsewig, Oliver; Wollmershäuser, Timo - CESifo - 2012

This paper uses panel vector autoregressive models and simulations of an estimated DSGE model to explore the reaction of Euro–area banks to the global financial crisis. We focus on their interest–rate setting behavior in response to standard macroeconomic shocks. Our main empirical finding...

Persistent link: https://www.econbiz.de/10010877927

How Expoerts Decide: Preferences or Private Assessments on a Monetary Policy Committee?

Hansen, Stephen; McMahon, Michael; Rivera, Carlos Velasco - CESifo - 2013

Using voting data from the Bank of England, we show that different individual assessments of the economy strongly influence votes after controlling for individual policy preferences. We estimate that internal members form more precise assessments than externals and are also more hawkish, though...

Persistent link: https://www.econbiz.de/10010877935

Forward Guidance in a Simple Model with a Zero Lower Bound

Illing, Gerhard; Siemsen, Thomas - CESifo - 2014

In this paper we present a three period setup to model central bank forward guidance in a liquidity trap. We analyze the role of long-run and short-run price stickiness under discretion and commitment in a straightforward and intuitive way. Despite the impact of price rigidity on welfare being...

Persistent link: https://www.econbiz.de/10010877957

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