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Banks, Liquidity Management, and Monetary Policy

Bianchi, Javier; Bigio, Saki - Federal Reserve Bank of Minneapolis - 2014

random and therefore create liquidity risk, which in turn determines the supply of credit and the money multiplier. We study … profiting from lending and incurring greater liquidity risk. We calibrate our model to study quantitatively why banks have …

Persistent link: https://www.econbiz.de/10010892298

Tax distortions in a neoclassical monetary economy

Cooley, Thomas F.; Hansen, Gary D. - Federal Reserve Bank of Minneapolis - 1991

In this paper we use the common perspective provided by the neoclassical growth model to evaluate the size of the distortions associated with different monetary and fiscal policies designed to finance a given sequence of government expenditures. We construct an artificial monetary economy...

Persistent link: https://www.econbiz.de/10005372825

Optimal fiscal and monetary policy: some recent results

Chari, V. V.; Christiano, Lawrence J.; Kehoe, Patrick J. - Federal Reserve Bank of Minneapolis - 1991

This paper studies the quantitative properties of fiscal and monetary policy in business cycle models. In terms of fiscal policy, optimal labor tax rates are virtually constant and optimal capital income tax rates are close to zero on average. In terms of monetary policy, the Friedman rule is...

Persistent link: https://www.econbiz.de/10005498465

The time consistency of monetary and fiscal policies

Alvarez, Fernando; Kehoe, Patrick J.; Neumeyer, Pablo - Federal Reserve Bank of Minneapolis - 2002

Are optimal monetary and fiscal policies time consistent in a monetary economy? Yes, but if and only if under commitment the Friedman rule of setting nominal interest rates to zero is optimal. This result is of applied interest because the Friedman rule is optimal for the standard preferences...

Persistent link: https://www.econbiz.de/10005427782

Maturity shortening and market failure

Thierfelder, Felix - Deutsche Bundesbank - 2012

Motivated by the financial crisis of 2007-2009 several papers have provided explanations for why liquidity may dry up … during market stress. This paper also looks at this issue but focuses on the question as to why the liquidity crunch was not … need to provide longer-term liquidity. The paper asks what market failure central banks were addressing by intervening and …

Persistent link: https://www.econbiz.de/10010957159

Maturity shortening and market failure

Thierfelder, Felix - Deutsche Bundesbank - 2012

Persistent link: https://www.econbiz.de/10010535438

Inflation, deflation, and uncertainty: What drives euro area option-implied inflation expectations and are they still anchored in the sovereign debt crisis?

Scharnagl, Michael; Stapf, Jelena - Deutsche Bundesbank - 2014

We tackle two questions in this paper: In the sovereign debt crisis, what moves the euro area inflation outlook and has the firm anchoring of medium to long-term inflation expectations been touched? Deriving densities from a new data set on options on the euro area harmonized index of consumer...

Persistent link: https://www.econbiz.de/10010957128

Liquidity Traps and Monetary Policy: Managing a Credit Crunch

Buera, Francisco J.; Nicolini, Juan Pablo - Federal Reserve Bank of Minneapolis - 2014

large increases in liquidity adopted by the government. The policy implications are in sharp contrast to the prevalent view … in most central banks, which is based on the New Keynesian explanation of the liquidity trap. …

Persistent link: https://www.econbiz.de/10010930255

Real effects of monetary policy in a world economy

Miller, Preston J.; Todd, Richard M. - Federal Reserve Bank of Minneapolis - 1992

We present a 2-country model with heterogeneous agents in which changes in a country’s monetary policy affect real interest rates, relative prices of traded and nontraded goods and real exchange rates. Nontransitory real effects of monetary policy stem solely from a friction (country-specific...

Persistent link: https://www.econbiz.de/10005367633

Inflation, money, and output under alternative monetary standards

Rolnick, Arthur J.; Weber, Warren E. - Federal Reserve Bank of Minneapolis - 1994

Our study examines whether there is a systematic relationship between the monetary standard under which a country operates and the rate of inflation it experiences. It also explores whether there are other properties of inflation, money, and output that differ between economies operating under a...

Persistent link: https://www.econbiz.de/10005367720