Showing 1 - 10 of 15
In this paper we provide a model of the macroeconomic implications of safe asset shortages. In particular, we discuss the emergence of a deflationary safety trap equilibrium with endogenous risk premia. It is an acute form of a liquidity trap, in which the shortage of a specific form of assets,...
Persistent link: https://www.econbiz.de/10012458738
associated with structural unemployment and low productivity -- due to technological sclerosis' and a scrambling' of productivity … traditional unemployment cost is due to reduced productivity and is determined by the recession's cumulative effect on the economy …'s churn rate. Although a recessionary shock increases the economy's turbulence' at impact, semi-structural VAR evidence from …
Persistent link: https://www.econbiz.de/10012472095
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
Many emerging market economies have relied on foreign exchange intervention (FXI) in response to gross capital inflows. In this paper, we study whether FXI has been an effective tool to dampen the effects of these inflows on the exchange rate. To deal with endogeneity issues, we look at the...
Persistent link: https://www.econbiz.de/10012457241
. Domestic assets experience dramatic depreciation and otherwise solvent investment projects and production, especially in the …
Persistent link: https://www.econbiz.de/10012471969
We explore the consequences of safe asset scarcity on aggregate demand in a stylized IS-LM/Mundell Fleming environment. Acute safe asset scarcity forces the economy into a "safety trap" recession. In the open economy, safe asset scarcity spreads from one country to the other via capital flows,...
Persistent link: https://www.econbiz.de/10012456630
After decades of trial, error, and occasional regress the pieces of a successful Latin American economic model can be seen scattered among the leading economies of the region. The most traditional macroeconomic maladies of the emerging world - such as chronic fiscal imbalances and monetary...
Persistent link: https://www.econbiz.de/10012470968
The observation that liquidations are concentrated in recessions has long been the subject of controversy. One view holds that liquidations are beneficial in that they result in increased restructuring. Another view holds that liquidations are privately inefficient and essentially wasteful. This...
Persistent link: https://www.econbiz.de/10012471429
, and expansions run into bottlenecks. While, depending on the nature of the shock, expansions may require reinforcement or …
Persistent link: https://www.econbiz.de/10012473077
This paper studies quarterly employment flows of approximately 10,000 large U.S. manufacturing establishments during 1972:1-1980:4.After estimating the extent of short run microeconomic substitution between employment and hours per worker (hours-week), we construct measures of the path of the...
Persistent link: https://www.econbiz.de/10012473851