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Exchange Rates, Local Currency Pricing and International Tax Policies

Chen, Sihao - 2018

Empirical evidence suggests that for many countries, retail prices of traded goods are sticky in national currencies. Movements in exchange rates then cause deviations from the law of one price, and exchange rate ëmisalignmentí, which cannot be corrected by monetary policy alone. This paper...

Persistent link: https://www.econbiz.de/10012480762

Fiscal and Monetary Stabilization Policy at the Zero Lower Bound : Consequences of Limited Foresight

Woodford, Michael - 2020

This paper reconsiders the degree to which macroeconomic stabilization is possible when the zero lower bound is a relevant constraint on the effectiveness of conventional monetary policy, under an assumption of bounded rationality. In particular, we reconsider the potential role of...

Persistent link: https://www.econbiz.de/10012481376

Optimal Inflation Targeting under Alternative Fiscal Regimes

Benigno, Pierpaolo - 2006

Standard discussions of flexible inflation targeting as an optimal monetary policy abstract completely from the consequences of monetary policy for the government budget. But at least some of the countries now adopting inflation targeting have substantial difficulty in controlling fiscal...

Persistent link: https://www.econbiz.de/10012466536

Optimal Monetary and Fiscal Policy in a Liquidity Trap

Eggertsson, Gauti B. - 2004

In previous work (Eggertsson and Woodford, 2003), we characterized the optimal conduct of monetary policy when a real disturbance causes the natural rate of interest to be temporarily negative, so that the zero lower bound on nominal interest rates binds, and showed that commitment to a...

Persistent link: https://www.econbiz.de/10012467849

Optimal Monetary and Fiscal Policy : A Linear Quadratic Approach

Benigno, Pierpaolo - 2003

We propose an integrated treatment of the problems of optimal monetary and fiscal policy, for an economy in which prices are sticky and the only available sources of government revenue are distorting taxes. Our linear-quadratic approach allows us to nest both conventional analyses of optimal...

Persistent link: https://www.econbiz.de/10012468792

Sharing the Burden : Monetary and Fiscal Responses to a World Liquidity Trap

Cook, David - 2011

With integrated trade and financial markets, a collapse in aggregate demand in a large country can cause 'natural real interest rates' to fall below zero in all countries, giving rise to a global 'liquidity trap'. This paper explores the policy choices that maximize the joint welfare of all...

Persistent link: https://www.econbiz.de/10012461527

Consumption and Real Exchange Rates in Professional Forecasts

Devereux, Michael B. - 2009

relative consumption growth and real exchange-rate depreciation across countries. The striking lack of evidence for this link … the consumption/real-exchange-rate anomaly or Backus-Smith puzzle - has prompted research on risk-sharing indicators with …. Independent evidence on the weak link between forecasts for consumption and real interest rates suggests that the presence of …

Persistent link: https://www.econbiz.de/10012463852

Consumption Risk-Sharing and the Real Exchange Rate : Why does the Nominal Exchange Rate Make Such a Difference?

Devereux, Michael B. - 2011

A basic prediction of effcient risk-sharing is that relative consumption growth rates across countries or regions … sharing: episodes of high relative regional consumption growth are associated with regional real exchange rate depreciation …. Across countries however, the association is reversed: relative consumption and real exchange rates are negatively correlated …

Persistent link: https://www.econbiz.de/10012461369

Fiscal Requirements for Price Stability

Woodford, Michael - 2001

This paper argues that maintaining price stability requires not only commitment to an appropriate monetary policy rule, but an appropriate fiscal policy rule as well. 'Ricardian equivalence' does not imply that fiscal policy is irrelevant, except in the case of a certain class of policies...

Persistent link: https://www.econbiz.de/10012470657

Control of the Public Debt : A Requirement for Price Stability?

Woodford, Michael - 1996

The paper considers the role of limits upon the permissible growth of public debt, like those stipulated in the Maastricht treaty, in making price stability possible. It is shown that a certain type of fiscal instability, namely variations in the present value of current and future primary...

Persistent link: https://www.econbiz.de/10012473158