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Use of variability of profits and other accounting-based ratios in order to estimate a firm's risk of insolvency is a well-established concept in management and economics. This paper argues that these measures fail to approximate the true level of risk accurately because managers consider other...
Persistent link: https://www.econbiz.de/10012970797
Inflation depends on both monetary and fiscal policies and on how agents believe that these policies will evolve in the future. Can monetary policy control inflation, when both monetary and fiscal policies are allowed to change over time? To analyse this problem, we study a model in which both...
Persistent link: https://www.econbiz.de/10012956987
Typically a constant – or zero – lower bound for interest rates is applied in shadow rate term structure models. However, euro area yield curve data suggest that a time-varying lower bound might be appropriate for the euro area. I show that this indeed is the case, i.e. a shadow rate model...
Persistent link: https://www.econbiz.de/10012987963
Optimal monetary policy under discretion, commitment, and optimal simple rules regimes is analyzed through a behavioral New Keynesian model. Flexible price level targeting dominates under discretion; flexible inflation targeting dominates under commitment; and strict price level targeting...
Persistent link: https://www.econbiz.de/10012921091
In this paper, we examine how professional forecasters' expectations and expectation uncertainty have reacted to the ECB's interest rate decisions and non-conventional monetary policy measures during the period 1999-2017. The analysis makes use of a conventional dif-in-dif type set up with...
Persistent link: https://www.econbiz.de/10012907651
Standard New Keynesian models predict implausibly large and favorable responses of inflation and output to expansionary forward guidance on interest rates. We find that the introduction of permanent or recurring active fiscal policy dampens the response of output and inflation to forward...
Persistent link: https://www.econbiz.de/10012908747
time and lending institutions and show that part of this discretion is due to private information that lenders have on … private information content is higher. The results suggest that bank discretionary and private information acquisition …
Persistent link: https://www.econbiz.de/10012909619
Macroeconomic models typically assume additively separable preferences where consumption enters the utility function in a logarithmic form. This restriction implies that consumption growth is highly sensitive to movements in real interest rates, which in turn implies an unrealistically steep...
Persistent link: https://www.econbiz.de/10013224102
This paper analyses the procyclicality of euro area total factor productivity and its role in business cycle amplification by estimating a medium-scale DSGE model with endogenous productivity mechanism on euro area data. Total factor productivity evolves endogenously as a consequence of costly...
Persistent link: https://www.econbiz.de/10013228852
We study the optimal precision of public information disclosures about banks assets quality. In our model the precision … of information affects banks' cost of raising funding and asset profile riskiness. In an imperfectly competitive banking …-to-intermediate precision if banks contract their repayment promises on public information) maximizes stability, and also yields the maximum …
Persistent link: https://www.econbiz.de/10013243229