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Heterogeneity and Output Fluctuations in a Dynamic Menu-Cost Economy

Caballero, Ricardo J. - 1991

When firms face menu costs, the relation between their output and money is highly nonlinear. At the aggregate level, however, this needs not be so. In this paper we study the dynamic behavior of a general equilibrium menu-cost economy where firms are heterogeneous in the shocks they perceive,...

Persistent link: https://www.econbiz.de/10012475276

Contingent Reserves Management : An Applied Framework

Caballero, Ricardo J. - 2004

One of the most serious problems that a central bank in an emerging market economy can face, is the sudden reversal of capital inflows. Hoarding international reserves can be used to smooth the impact of such reversals, but these reserves are seldom sufficient and always expensive to hold. In...

Persistent link: https://www.econbiz.de/10012467904

Emerging Market Crises : An Asset Markets Perspective

Caballero, Ricardo J. - 1998

Although internal policy mismanagements can be cited in most recent emerging market crises, they seldom account fully for the severity of these crises. The reluctance of international investors to provide the resources that would limit the extent of the reversal almost invariably plays a key...

Persistent link: https://www.econbiz.de/10012471969

On the Timing and Efficiency of Creative Destruction

Caballero, Ricardo J. - 1994

This paper analyzes the timing, pace and efficiency of the on- going job reallocation that results from product and process innovation. There are strong reasons why an efficient economy ought to concentrate both job creation and destruction during cyclical downturns, when the opportunity cost of...

Persistent link: https://www.econbiz.de/10012474151

Financial Crash, Commodity Prices and Global Imbalances

Caballero, Ricardo J. - 2008

In this paper we argue that the persistent global imbalances, the subprime crisis, and the volatile oil and asset prices that followed it, are tightly interconnected. They all stem from a global environment where sound and liquid financial assets are in scarce supply

Persistent link: https://www.econbiz.de/10012464126

Price Rigidities, Asymmetries, and Output Fluctuations

Caballero, Ricardo J. - 1992

In this paper we characterize the average response of output to aggregate demand shocks in an economy where individual firms follow state-dependent pricing rules. We find that: (i) the average response of output to aggregate demand shocks decreases with core inflation and varies...

Persistent link: https://www.econbiz.de/10012474884

Rents, Technical Change, and Risk Premia : Accounting for Secular Trends in Interest Rates, Returns on Capital, Earning Yields, and Factor Shares

Caballero, Ricardo J. - 2017

The secular decline in safe interest rates since the early 1980s has been the subject of considerable attention. In this short paper, we argue that it is important to consider the evolution of safe real rates in conjunction with three other first-order macroeconomic stylized facts: the relative...

Persistent link: https://www.econbiz.de/10012455554

A Note on Temporary Supply Shocks with Aggregate Demand Inertia

Caballero, Ricardo J.; Simsek, Alp - National Bureau of Economic Research - 2022

We study optimal monetary policy during temporary supply contractions when aggregate demand has inertia and expansionary policy is constrained. In this environment, it is optimal to run the economy hot until supply recovers. Positive output gaps in the low-supply phase lessen the negative output...

Persistent link: https://www.econbiz.de/10013172115

On the Global Impact of Risk-off Shocks and Policy-put Frameworks

Caballero, Ricardo J. - 2019

Global risk-off shocks can be highly destabilizing for financial markets and, absent an adequate policy response, may trigger severe recessions. Policy responses were more complex for developed economies with very low interest rates after the Global Financial Crisis (GFC). We document, however,...

Persistent link: https://www.econbiz.de/10012479979

Asset Prices and Aggregate Demand in a "Covid-19" Shock : A Model of Endogenous Risk Intolerance and LSAPs

Caballero, Ricardo J. - 2020

following a large real (non-financial) shock; and (ii) demonstrate the effectiveness of Large Scale Asset Purchases (LSAPs) in … addressing these contractions. The key mechanism stems from heterogeneous risk tolerance: as a recessionary shock hits the … Covid-19 shock and the large response by all the major central banks provide a vivid illustration of the environment we seek …

Persistent link: https://www.econbiz.de/10012482001