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Limited Asset Market Participation : Does it Really Matter for Monetary Policy?
Ascari, Guido - 2013
We study the design of monetary policy in an economy characterized by staggered wage and price contracts together with limited asset market participation (LAMP). Contrary to previous results, we find that once nominal wage stickiness, an incontrovertible empirical fact, is considered: The Taylor...
Persistent link: https://www.econbiz.de/10013092253
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The Power of Forward Guidance and the Fiscal Theory of the Price Level
McClung, Nigel - 2018
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
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Money Growth and Inflation : International Historical Evidence on High Inflation Episodes for Developed Countries
Gallegati, Marco - 2019
How long is the long run in the relationship between money growth and inflation? How important are high inflation episodes for the unit slope finding in the quantity theory of money? To answer these questions we study the relationship between excess money growth and inflation over time and...
Persistent link: https://www.econbiz.de/10012895133
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Monetary Policy, the Financial Cycle and Ultralow Interest Rates
Juselius, Mikael - 2018
Do the prevailing unusually and persistently low real interest rates reflect a decline in the natural rate of interest as commonly thought? We argue that this is only part of the story. The critical role of financial factors in influencing medium-term economic fluctuations must also be taken...
Persistent link: https://www.econbiz.de/10012935733
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Why so Low for so Long? A Long-Term View of Real Interest Rates
Borio, Claudia - 2018
Prevailing explanations of the decline in real interest rates since the early 1980s are premised on the notion that 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...
Persistent link: https://www.econbiz.de/10012931472
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Quantity Rationing of Credit
Waters, George - 2012
Quantity rationing of credit, when firms are denied loans, has greater potential to explain macroeconomic fluctuations than borrowing costs. This paper develops a DSGE model with both types of financial frictions. A deterioration in credit market confidence leads to a temporary change in the...
Persistent link: https://www.econbiz.de/10013112130
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Asymmetric Effects of Conventional and Unconventional Monetary Policy When Rates are Low
Laine, Olli-Matti; Pihlajamaa, Matti - 2023
We study asymmetric inflation effects of both conventional and unconventional monetary policy in the euro area during the period of low nominal interest rates. We find that rate cuts are inflationary also during low interest rates. Positive quantitative easing surprises have a deflationary...
Persistent link: https://www.econbiz.de/10014259306
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Moral Hazard in the Credit Market When the Collateral Value is Stochastic
Niinimäki, Juha-Pekka - 2011
This theoretical paper explores the effects of costly and non-costly collateral on moral hazard, when collateral value may fluctuate. Given that all collateral is costly, stochastic collateral will entail the same positive incentive effects as nonstochastic collateral, provided the variation in...
Persistent link: https://www.econbiz.de/10013130404
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Credit Allocation, Capital Requirements and Output
Jokivuolle, Esa - 2011
We show how banks' excessive risk-taking, stemming from informational asymmetries in loan markets, can lead to an …
Persistent link: https://www.econbiz.de/10013130532
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Subordinated Debt, Market Discipline, and Bank Risk
Chen, Yehning - 2011
disciplining banks. Under our proposal, investors buy the subdebt of a bank only if they receive favourable information about the … bank, and the bank is subject to a regulatory examination if it fails to issue subdebt. By forcing banks to be examined … when they are likely weak, subdebt regulation not only reduces the chance that managers of distressed banks can take value …
Persistent link: https://www.econbiz.de/10013118815