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Fiscal Consequences of Central Bank Losses

Cecchetti, Stephen G.; Hilscher, Jens - National Bureau of Economic Research - 2024

In response to the Global Financial Crisis, central banks engaged in large-scale asset purchases funded by the issuance of reserves. These "unconventional" policies continued during the pandemic, so that by 2022 central banks' balance sheets had grown up to ten-fold. As a result of rapidly...

Persistent link: https://www.econbiz.de/10014544756

Non-Constant Demand Elasticities, Firm Dynamics and Monetary Non-Neutrality : Role of Demand Shocks

Aruoba, S. Borağan; Oue, Eugene; Saffie, Felipe; … - National Bureau of Economic Research - 2024

We develop a simple menu-cost model with non-constant elasticity of demand that features idiosyncratic productivity and demand shocks. The model is calibrated to match firm-level productivity and demand processes estimated from U.S. data. Despite its simplicity, the calibrated model delivers...

Persistent link: https://www.econbiz.de/10014544795

Confronting Divergent Interests in Cross-Country Regulatory Arrangements

Kane, Edward J. - 2005

efficiently with cross-border issues. To track and control insolvency risk within and across any set of countries, officials must …

Persistent link: https://www.econbiz.de/10012466806

Anticipated Money, Inflation Uncertainty, and Real Economic Activity

Makin, John H. - 1981

This paper critically examines a number of maintained hypotheses that are necessarily being tested along with the basic notion derived from the rational expectations (RE) formulation of Lucas (1972) (19 73) that "only unanticipated money matters." The trend stationary representation of secular...

Persistent link: https://www.econbiz.de/10012478355

Asset Prices and Aggregate Demand in a "Covid-19" Shock : A Model of Endogenous Risk Intolerance and LSAPs

Caballero, Ricardo J. - 2020

In this paper we: (i) provide a model of the endogenous risk intolerance and severe aggregate demand contractions … addressing these contractions. The key mechanism stems from heterogeneous risk tolerance: as a recessionary shock hits the … economy and brings down asset prices, risk-tolerant agents' wealth share declines and their leverage rises endogenously. This …

Persistent link: https://www.econbiz.de/10012482001

Risk, Uncertainty and Monetary Policy

Bekaert, Geert - 2010

stance. When decomposing the VIX into two components, a proxy for risk aversion and expected stock market volatility … ("uncertainty"), we find that a lax monetary policy decreases both risk aversion and uncertainty, with the former effect being …

Persistent link: https://www.econbiz.de/10012462259

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

Quality Adjustment at Scale : Hedonic vs. Exact Demand-Based Price Indices

Ehrlich, Gabriel; Haltiwanger, John C.; Jarmin, Ronald S.; … - National Bureau of Economic Research - 2023

This paper explores alternative methods for adjusting price indices for quality change at scale. These methods can be applied to large-scale item-level transactions data that includes information on prices, quantities, and item attributes. The hedonic methods can take into account the changing...

Persistent link: https://www.econbiz.de/10014322697

Inflation and Real Activity over the Business Cycle

Bianchi, Francesco; Nicolò, Giovanni; Song, Dongho - National Bureau of Economic Research - 2023

We study the relation between inflation and real activity over the business cycle. We employ a Trend-Cycle VAR model to control for low-frequency movements in inflation, unemployment, and growth that are pervasive in the post-WWII period. We show that cyclical fluctuations of inflation are...

Persistent link: https://www.econbiz.de/10014247995

Greed? Profits, Inflation, and Aggregate Demand

Bilbiie, Florin Ovidiu; Känzig, Diego R. - National Bureau of Economic Research - 2023

Amidst the recent resurgence of inflation, this paper investigates the interplay of corporate profits and income distribution in shaping inflation and aggregate demand within the New Keynesian framework. We derive a novel analytical condition for profits to be procyclical and inflationary....

Persistent link: https://www.econbiz.de/10014337850