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Why So Low for So Long? A Long-Term View of Real Interest Rates
Borio, Claudio E. V. - 2017
real interest rates are driven by variations in desired saving and investment. But based on data stretching back to 1870 … for 19 countries, our systematic analysis casts doubt on this view. The link between real interest rates and saving-investment … determinants appears tenuous. While it is possible to find some relationships consistent with the theory in some periods …
Persistent link: https://www.econbiz.de/10012941033
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DSGE Models and Central Banks
Tovar, Camilo Ernesto - 2013
Over the past 15 years there has been remarkable progress in the specification and estimation of dynamic stochastic general equilibrium (DSGE) models. Central banks in developed and emerging market economies have become increasingly interested in their usefulness for policy analysis and...
Persistent link: https://www.econbiz.de/10014214942
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Corporate Investment and the Exchange Rate : The Financial Channel
Banerjee, Ryan - 2020
Using firm-level data for 18 major global economies, we find that the exchange rate affects corporate investment … through a financial channel: exchange rate depreciation dampens corporate investment through firm leverage and FX debt. These … findings are consistent with the predictions of a stylised model of credit risk in which exchange rates can affect investment …
Persistent link: https://www.econbiz.de/10012841849
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A Policy Model to Analyze Macroprudential Regulations and Monetary Policy
Alpanda, Sami - 2014
We construct a small-open-economy, New Keynesian dynamic stochastic general-equilibrium model with real-financial linkages to analyze the effects of financial shocks and macroprudential policies on the Canadian economy. Our model has four key features. First, it allows for non-trivial...
Persistent link: https://www.econbiz.de/10013047527
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International Trade Finance and the Cost Channel of Monetary Policy in Open Economies
Patel, Nikhil - 2016
This paper models the interaction between international trade finance and monetary policy in open economies and shows that trade finance affects the propagation mechanism of all macroeconomic shocks that are identified to be drivers of business cycles in advanced economies. The model is...
Persistent link: https://www.econbiz.de/10013000729
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Could a Higher Inflation Target Enhance Macroeconomic Stability?
Dorich, José - 2018
Recent international experience with the effective lower bound on nominal interest rates has rekindled interest in the benefits of inflation targets above 2 per cent. We evaluate whether an increase in the inflation target to 3 or 4 per cent could improve macroeconomic stability in the Canadian...
Persistent link: https://www.econbiz.de/10012919921
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A Quantitative Case for Leaning Against the Wind
Filardo, Andrew J. - 2016
Should a monetary authority lean against the build-up of financial imbalances? We study this policy question in an environment in which there are recurring cycles of financial imbalances that develop over time and eventually collapse in a costly manner. The optimal policy reflects the trade-off...
Persistent link: https://www.econbiz.de/10012977679
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Cyclical Macroeconomic Policy, Financial Regulation and Economic Growth
Aghion, Philippe - 2014
This paper investigates the effect of cyclical macroeconomic policy and financial sector characteristics on growth. Using cross-country, cross-industry OECD data, it yields two main findings. First, countercyclical fiscal and monetary policies foster growth disproportionately in more...
Persistent link: https://www.econbiz.de/10013058584
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Does the Liquidity Trap Exist?
Lhuissier, Stéphane - 2020
The liquidity trap is synonymous with ineffective monetary policy. The common wisdom is that, as the short-term interest rate nears its effective lower bound, monetary policy cannot do much to stimulate the economy. However, central banks have resorted to alternative instruments, such as QE,...
Persistent link: https://www.econbiz.de/10012837519
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Oil, Equities, and the Zero Lower Bound
Datta, Deepa - 2017
Since 2008, oil and equity returns have moved together much more than they did previously. In addition, we show that both oil and equity returns have become more responsive to macroeconomic news. Before 2008, there is little evidence that oil returns were responsive to macroeconomic news. We...
Persistent link: https://www.econbiz.de/10012960298