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Cieślak, Anna; Hansen, Stephen; McMahon, Michael; … - National Bureau of Economic Research - 2023

Uncertainty is a ubiquitous concern emphasized by policymakers. We study how uncertainty affects decision-making by the Federal Open Market Committee (FOMC). We distinguish between the notion of Fed-managed uncertainty vis-a-vis uncertainty that emanates from within the economy and which the Fed...

Persistent link: https://www.econbiz.de/10014436980

Monetary Policy in an Uncertain Environment

Feldstein, Martin - 2003

This paper discusses the nature of the uncertainty faced by central banks and considers three approaches to dealing with uncertainty(1) formal optimization models and robust rules based on such models; (2) informal rules like the Taylor rule and inflation targeting; and (3) a case by case...

Persistent link: https://www.econbiz.de/10012468728

Optimal Monetary Policy with Informational Frictions

Angeletos, George-Marios - 2011

This paper studies optimal policy in a business-cycle setting in which firms have a blurry understanding of the state of the economy due to informational or cognitive constraints. The latter are not only the source of nominal rigidity but also an impediment in the coordination of production. The...

Persistent link: https://www.econbiz.de/10012461077

Robust Optimal Policy in a Forward-Looking Model with Parameter and Shock Uncertainty

Giannoni, Marc - 2006

This paper characterizes a robust optimal policy rule in a simple forward-looking model, when the policymaker faces uncertainty about model parameters and shock processes. We show that the robust optimal policy rule is likely to involve a stronger response of the interest rate to fluctuations in...

Persistent link: https://www.econbiz.de/10012466729

Monetary Policy and the Currency Denomination of Debt : A Tale of Two Equilibria

Velasco, Andres - 2004

Exchange rate policies depend on portfolio choices, and portfolio choices depend on anticipated exchange rate policies. This opens the door to multiple equilibria in policy regimes. We construct a model in which agents optimally choose to denominate their assets and liabilities either in...

Persistent link: https://www.econbiz.de/10012467862

Sovereign Debt Portfolios, Bond Risks, and the Credibility of Monetary Policy

Du, Wenxin - 2016

and nominal bond risks in the presence of risk-averse investors. In our model, low credibility governments inflate during … inflation, investors require risk premia on nominal debt, making nominal debt issuance costly for low credibility governments … significantly larger nominal bond risk premia and borrow less in local currency …

Persistent link: https://www.econbiz.de/10012456087

Home Bias in Portfolios and Taxation of Asset Income

Gordon, Roger - 2001

Intuitively, the observed 'home bias' in individual portfolios plausibly explains the international capital immobility in aggregate data reported by Feldstein and Horioka (1980) as well as the survival of taxes on capital income. These intuitions are examined explicitly in a model where random...

Persistent link: https://www.econbiz.de/10012470533

A Synthesis of Keynesian, Monetary, and Portfolio Approaches to FlexibleExchange Rates

Gylfason, Thorvaldur - 1982

This paper presents a simple synthesis of Keynesian, monetary, and portfolio approaches to macroeconomic theory under …

Persistent link: https://www.econbiz.de/10012478158

Imperfect Asset Substitutability and Monetary Policy under Fixed Exchange Rates

Obstfeld, Maurice - 1980

This paper presents a long-run model of the open economy in a world of fixed exchange rates and imperfect substitutability between bonds denominated in different currencies. The model explicitly accounts for the wealth flow accompanying current-account imbalance and for the flow of interest...

Persistent link: https://www.econbiz.de/10012478651

Uncertainty, Long-Run, and Monetary Policy Risks in a Two-Country Macro Model

Berg, Kimberly A. - 2020

We study international currency risk in a two-country dynamic stochastic general equilibrium model under incomplete … markets. The underlying sources of risk are direct shocks to productivity growth, shocks to a long-run risk component of …-run risk and stochastic volatility shocks have the interpretation of aggregate demand shocks. Cross-country heterogeneity in …

Persistent link: https://www.econbiz.de/10012481147