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Sharing the burden: monetary and fiscal responses to a world liquidity trap

Cook, David; Devereux, Michael B. - Federal Reserve Bank of Dallas - 2011

interest rates" to fall below zero in all countries, giving rise to a global "liquidity trap." This paper explores the optimal …. ; The key feature of demand shocks in a liquidity trap is that relative prices respond perversely. A negative shock causes … response to conditions generating a global liquidity trap, there is a critical mutual interaction between monetary and fiscal …

Persistent link: https://www.econbiz.de/10009292929

Do good institutions promote counter-cyclical macroeconomic policies?

Calderón, César; Duncan, Roberto; Schmidt-Hebbel, Klaus - Federal Reserve Bank of Dallas - 2012

The literature has argued that developing countries are unable to adopt counter-cyclical monetary and fiscal policies due to financial imperfections and unfavorable politicaleconomy conditions. Using a world sample of 115 industrial and developing countries for 1984-2008, we find that the level...

Persistent link: https://www.econbiz.de/10011026846

Export shocks and the zero bound trap

Fujiwara, Ippei - Federal Reserve Bank of Dallas - 2010

bound is not a binding constraint. This could be one possible explanation as to why a country like Japan experienced much …

Persistent link: https://www.econbiz.de/10008690997

The role of real wage rigidity and labor market frictions for unemployment and inflation dynamics

Christoffel, Kai; Linzert, Tobias - Deutsche Bundesbank - 2006

In this paper we incorporate a labor market with matching frictions and wage rigidities into the New Keynesian business cycle model. In particular, we analyze the effect of a monetary policy shock and investigate how labor market frictions affect the transmission process of monetary policy. The...

Persistent link: https://www.econbiz.de/10005083106

Opting out of the great inflation: German monetary policy after the breakdown of Bretton Woods

Beyer, Andreas; Gaspar, Vítor; Gerberding, Christina; … - Deutsche Bundesbank - 2009

During the turbulent 1970s and 1980s the Bundesbank established an outstanding reputation in the world of central banking. Germany achieved a high degree of domestic stability and provided safe haven for investors in times of turmoil in the international financial system. Eventually the...

Persistent link: https://www.econbiz.de/10005083151

Taylor rules for the euro area: the issue of real-time data

Gerdesmeier, Dieter; Roffia, Barbara - Deutsche Bundesbank - 2004

Recently, a number of studies have made an attempt to deal with the key issue of the incompleteness of information available to the central bank when taking its monetary policy decisions. This study adds to this literature by tackling the problem with regard to the euro area. The analysis is...

Persistent link: https://www.econbiz.de/10005083249

Monetary and fiscal policy rules in a model with capital accumulation and potentially non-superneutral money

von Thadden, Leopold - Deutsche Bundesbank - 2002

We consider the properties of two monetary policy rules (monetary targeting, Taylor-type interest rate rule) in an intertemporal equilibrium model with capital accumulation and two outside assets (government bonds, fiat money). The paper shows that the long-run behaviour of the economy depends...

Persistent link: https://www.econbiz.de/10005083289

Interest rate reaction functions for the euro area Evidence from panel data analysis

Ruth, Karsten - Deutsche Bundesbank - 2004

As of today, estimating interest rate reaction functions for the Euro Area is hampered by the short time span since the conduct of a single monetary policy. In this paper we circumvent the common use of aggregated data before 1999 by estimating interest rate reaction functions based on a panel...

Persistent link: https://www.econbiz.de/10005083306

Exchange rate dynamics, expectations, and monetary policy

Chen, Qianying - Deutsche Bundesbank - 2011

This paper re-investigates the implications of monetary policy rules on changes in exchange rate, in a risk-adjusted, uncovered interest parity model with unrestricted parameters, emphasizing the importance of modeling market expectations of monetary policy. I use consensus forecasts as a proxy...

Persistent link: https://www.econbiz.de/10009283654

Keynesian economics without the LM and IS curves: a dynamic generalization of the Taylor-Romer model

Koenig, Evan F. - Federal Reserve Bank of Dallas - 2008

John Taylor and David Romer champion an approach to teaching undergraduate macroeconomics that dispenses with the LM half of the IS-LM model and replaces it with a rule for setting the interest rate as a function of inflation and the output gap - i.e., a Taylor rule. But the IS curve is...

Persistent link: https://www.econbiz.de/10004993781