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Long-term Debt and Optimal Policy in the Fiscal Theory of the Price Level

Cochrane, John H. - 1998

The fiscal theory says that the price level is determined by the ratio of nominal debt to the present value of real primary surpluses. I analyze long-term debt and optimal policy in the fiscal theory. I find that the maturity structure of the debt matters. For example, it determines whether news...

Persistent link: https://www.econbiz.de/10012472043

Stepping on a Rake : the Fiscal Theory of Monetary Policy

Cochrane, John H. - 2016

The fiscal theory of the price level can describe monetary policy. Governments can set interest rate targets and thereby affect inflation, with no change in fiscal surpluses. The same basic mechanism describes interest rate targets, forward guidance, open market operations, and quantitative...

Persistent link: https://www.econbiz.de/10012455701

Monetary Policy with Interest on Reserves

Cochrane, John H. - 2014

I analyze monetary policy with interest on reserves and a large balance sheet. I show that conventional theories do not determine inflation in this regime, so I base the analysis on the fiscal theory of the price level. I find that monetary policy can peg the nominal rate, and determine expected...

Persistent link: https://www.econbiz.de/10012458052

A Cross-Sectional Test of a Production-Based Asset Pricing Model

Cochrane, John H. - 1992

This paper tests a factor pricing model for stock returns. The factors are returns on physical investment, inferred … from investment data via a production function. The tests examine the model's ability to explain the variation in expected … Ross factor model, and it performs substantially better than a simple consumption-based model. In comparison tests, the …

Persistent link: https://www.econbiz.de/10012474955

Determinacy and Identification with Taylor Rules

Cochrane, John H. - 2007

If one accepts the new-Keynesian solution, the parameters of the Taylor rule relating interest rates to inflation and other variables are not identified without unrealistic assumptions. Thus, Taylor rule regressions cannot be used to argue that the Fed conquered inflation by moving from a...

Persistent link: https://www.econbiz.de/10012465240

Determinacy and Identification with Taylor Rules

Cochrane, John H. - 2007

Persistent link: https://www.econbiz.de/10012465241

The New-Keynesian Liquidity Trap

Cochrane, John H. - 2013

In standard solutions, the new-Keynesian model produces a deep recession with deflation in a liquidity trap. The model also makes unusual policy predictions: Useless government spending, technical regress, and capital destruction have large multipliers. These predictions become larger as prices...

Persistent link: https://www.econbiz.de/10012459186