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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

A Luna-tic Stablecoin Crash

Uhlig, Harald - National Bureau of Economic Research - 2022

After remaining close to 1 US Dollar since its inception in November 2020, the algorithmic stablecoin UST crashed in the two weeks of May 9th to May 15th, 2022, leading to a price collapse of the underlying LUNA token and the erasure of more than 50 Billion U.S. Dollar or 90% in market value

Persistent link: https://www.econbiz.de/10013334473

Neoclassical Growth with Long-Term One-Sided Commitment Contracts

Krueger, Dirk; Uhlig, Harald - National Bureau of Economic Research - 2022

-utility we provide a complete analytical characterization of the optimal consumption insurance contract, the stationary … consumption distribution and the equilibrium aggregate capital stock and interest rate. Under parameter restrictions, there is a … unique stationary equilibrium with partial consumption insurance and a stationary consumption distribution that takes a …

Persistent link: https://www.econbiz.de/10013388874

One-Sided Limited Commitment and Aggregate Risk

Ando, Yoshiki; Krueger, Dirk; Uhlig, Harald - National Bureau of Economic Research - 2023

assets short. The model results, under suitable restrictions of the parameters of the model, in partial consumption insurance … non-degenerate consumption- and wealth distribution. We use the tractability of the model to study, analytically …

Persistent link: https://www.econbiz.de/10014437034

Neoclassical Growth Transition Dynamics with One-Sided Commitment

Krueger, Dirk; Li, Fulin; Uhlig, Harald - National Bureau of Economic Research - 2024

equilibrium features imperfect insurance and a non-degenerate cross-sectional consumption distribution. When household labor … dynamics induced by unexpected technology shocks, including the evolution of the consumption distribution, in closed form. Thus … which limits to consumption insurance emerge endogenously due to limited commitment …

Persistent link: https://www.econbiz.de/10015056206

What are the Effects of Fiscal Policy Shocks?

Mountford, Andrew - 2008

We propose and apply a new approach for analyzing the effects of fiscal policy using vector autoregressions. Specifically, we use sign restrictions to identify a government revenue shock as well as a government spending shock, while controlling for a generic business cycle shock and a monetary...

Persistent link: https://www.econbiz.de/10012464097

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