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Sticky Discount Rates
Fukui, Masao; Gormsen, Niels; Huber, Kilian - National Bureau of Economic Research - 2024
We show that firms' nominal required returns to capital (i.e., their discount rates) are sticky with respect to expected inflation. Such nominally sticky discount rates imply that increases in expected inflation directly lower firms' real discount rates and thereby raise real investment. We...
Persistent link: https://www.econbiz.de/10014512092
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On the Optimal Choice of a Monetary Policy Instrument
Atkeson, Andrew - 2007
The optimal choice of a monetary policy instrument depends on how tight and transparent the available instruments are and on whether policymakers can commit to future policies. Tightness is always desirable; transparency is only if policymakers cannot commit. Interest rates, which can be made...
Persistent link: https://www.econbiz.de/10012465252
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Optimal Fiscal and Monetary Policy Under Sticky Prices
Schmitt-Grohe, Stephanie - 2002
This paper studies optimal .scal and monetary policy under sticky product prices. The theoretical framework is a stochastic production economy without capital. The government finances an exogenous stream of purchases by levying distortionary income taxes, printing money, and issuing one-period...
Persistent link: https://www.econbiz.de/10012469489
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Navigating by Falling Stars : Monetary Policy with Fiscally Driven Natural Rates
Campos, Rodolfo G.; Fernández-Villaverde, Jesús; … - National Bureau of Economic Research - 2024
We study a new type of monetary-fiscal interaction in a heterogeneous-agent New Keynesian model with a fiscal block. Due to household heterogeneity, the stock of public debt affects the natural interest rate, forcing the central bank to adapt its monetary policy rule to the fiscal stance to...
Persistent link: https://www.econbiz.de/10014512073
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Identifying Monetary Policy Shocks : A Natural Language Approach
Aruoba, S. Borağan; Drechsel, Thomas - National Bureau of Economic Research - 2024
constructed by only controlling for the staff forecasts imply responses of macro variables at odds with theory. We directly link …
Persistent link: https://www.econbiz.de/10014544696
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The Drivers of Post-Pandemic Inflation
Giannone, Domenico; Primiceri, Giorgio E. - National Bureau of Economic Research - 2024
Post-covid inflation was predominantly driven by unexpectedly strong demand forces, not only in the United States, but also in the Euro Area. In comparison, the inflationary impact of adverse supply shocks was less pronounced, even though these shocks significantly constrained economic activity....
Persistent link: https://www.econbiz.de/10015056186
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Optimal Interest-Rate Rules in a Forward-Looking Model, and Inflation Stabilization versus Price-Level Stabilization
Giannoni, Marc P. - 2010
This paper characterizes the properties of various interest-rate rules in a basic forward-looking model. We compare simple Taylor rules and rules that respond to price-level fluctuations (called Wicksellian rules). We argue that by introducing an appropriate amount of history dependence in...
Persistent link: https://www.econbiz.de/10012462667
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Simple and Robust Rules for Monetary Policy
Taylor, John B. - 2010
This paper focuses on simple rules for monetary policy which central banks have used in various ways to guide their interest rate decisions. Such rules, which can be evaluated using simulation and optimization techniques, were first derived from research on empirical monetary models with...
Persistent link: https://www.econbiz.de/10012462734
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Interest-Rate Rules in an Estimated Sticky Price Model
Rotemberg, Julio J. - 1998
This paper evaluates alternative rules by which the Fed may set interest rates using the small model of the U.S. economy estimated in Rotemberg and Woodford (1997). Our main substantive finding is that low and stable inflation together with stable interest rates can be achieved by letting the...
Persistent link: https://www.econbiz.de/10012472193
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Fiscal Histories
Cochrane, John H. - National Bureau of Economic Research - 2022
The fiscal theory states that inflation adjusts so that the real value of government debt equals the present value of … fiscal theory to interpret historical episodes, including the rise and fall of inflation in the 1970s and 1980s, the long … pegs, the ends of hyperinflations, currency crashes, and the success of inflation targets. Going forward, fiscal theory …
Persistent link: https://www.econbiz.de/10013361983