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Credit markets, limited commitment, and government debt

Williamson, Stephen; Carapella, Francesca - Federal Reserve Bank of St. Louis - 2014

A dynamic model with credit under limited commitment is constructed, in which limited memory can weaken the effects of punishment for default. This creates an endogenous role for government debt in credit markets, and the economy can be non-Ricardian. Default can occur in equilibrium, and...

Persistent link: https://www.econbiz.de/10010754948

Keynesian inefficiency and optimal policy: a new monetarist approach

Williamson, Stephen - Federal Reserve Bank of St. Louis - 2014

A simple model of monetary/labor search is constructed to study Keynesian indeterminacy and optimal policy. In the model, economic agents have trouble splitting the surplus from exchange appropriately, and we consider monetary and fiscal policies that correct this Keynesian inefficiency. A...

Persistent link: https://www.econbiz.de/10010784193

Scarcity of Safe Assets, Inflation, and the Policy Trap

Andolfatto, David; Williamson, Stephen - Federal Reserve Bank of St. Louis - 2015

We construct a model in which all consolidated government debt is used in transactions, with money being more widely acceptable. When asset market constraints bind, the model can deliver low real interest rates and positive rates of inflation at the zero lower bound. Optimal monetary policy in...

Persistent link: https://www.econbiz.de/10011133768

Scarce collateral, the term premium, and quantitative easing

Williamson, Stephen - Federal Reserve Bank of St. Louis - 2014

A model of money, credit, and banking is constructed in which the differential pledgeability of collateral and the scarcity of collateralizable wealth lead to a term premium — an upward-sloping nominal yield curve. Purchases of long-maturity government debt by the central bank are always a...

Persistent link: https://www.econbiz.de/10011027330

Rehypothecation

Andolfatto, David; Martin, Fernando M.; Zhang, Shengxing - Federal Reserve Bank of St. Louis - 2014

Rehypothecation refers to the practice of re-using (selling or pledging as collateral) an asset that has already been pledged as collateral for a loan. We develop a dynamic general equilibrium monetary model where an “asset shortage” motivates the rehypothecation of assets. We find that in...

Persistent link: https://www.econbiz.de/10011160737

Implications of heterogeneity in preferences, beliefs and asset trading technologies for the macroeconomy

Chien, YiLi; Cole, Harold L.; Lustig, Hanno - Federal Reserve Bank of St. Louis - 2014

This paper analyzes and computes the equilibria of economies with large numbers of heterogeneous agents who have different asset trading technologies, preferences, and beliefs. We illustrate the value of our method by using it to evaluate the implications of these heterogeneities through several...

Persistent link: https://www.econbiz.de/10010798470

The multiplier : a general equilibrium analysis of multi-stage-fabrication economy with inventories

Wen, Yi (contributor) - 2005

Persistent link: https://www.econbiz.de/10003344532

The 2001 recession and the states of the 8th district

Owyang, Michael T. (contributor); … - 2005

the period surrounding the 1990-91 NBER recession, six of the seven states had recessions that were much shorter than for … the country as a whole. For the period surrounding the 2001 NBER recession, four states--Arkansas, Indiana, Kentucky, and … Tennessee--entered and exited recession earlier than the country as a whole. Recessions in the other three states began earlier …

Persistent link: https://www.econbiz.de/10002956721

The effectiveness of monetary policy : an assessment

Wen, Yi (contributor) - 2005

"When monetary policies are endogenous, the conventional VAR approach for detecting the effect of monetary policies is powerless. This paper proposes to test the implication of monetary policies along a different dimension. That implication is to exploit the policy induced exogeneity of...

Persistent link: https://www.econbiz.de/10002956722

Another look at sticky prices and output persistence

Wang, Peng-fei (contributor); Wen, Yi (contributor) - 2005

"Price rigidity is the key mechanism for propagating business cycles in traditional Keynesian theory. Yet the New Keynesian literature has failed to show that sticky prices by themselves can effectively propagate business cycles in general equilibrium. We show that price rigidity in fact can (by...

Persistent link: https://www.econbiz.de/10002956723