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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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Household Optimism and Borrowing
Hyytinen, Ari - 2012
A unique Finnish household-level data from 1994 to 2009 allow us to measure how households' financial expectations are … related to the subsequent outcomes. We use the difference between the two to measure forecast errors and household optimism …
Persistent link: https://www.econbiz.de/10013104174
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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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Accounting for Debt Service : The Painful Legacy of Credit Booms
Drehmann, Mathias - 2017
lag between credit booms and peaks in debt service which, in a panel of household debt in 17 countries, is four years on … contracts are long term. The delayed increase in debt service following an impulse to new borrowing largely explains why credit … transmission channel whereby credit expansions can have adverse long-lasting real effects …
Persistent link: https://www.econbiz.de/10012953315
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Stagnant Wages, Sectoral Misallocation and Slowing Productivity Growth
Schmöller, Michaela - 2019
I propose a two-sector endogenous growth model with heterogeneous sectoral productivity and sector-specific, nonlinear hiring costs to analyse the link between sectoral resource allocation, low productivity growth and stagnant real wages. My results suggest that an upward shift in the labor...
Persistent link: https://www.econbiz.de/10012870989
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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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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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Bond Finance, Bank Credit, and Aggregate Fluctuations in an Open Economy
Chang, Roberto - 2017
bank credit becomes relatively more expensive, reflecting the scarcity of bank equity. More generally, the model is …
Persistent link: https://www.econbiz.de/10012968483
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Labour and Product Market Competition in a Small Open Economy − Simulation Results Using a DGE Model of the Finnish Economy
Kilponen, Juha; Ripatti, Antti - 2007
Using the DGE model of the Finnish Economy (the 'Aino' model), we study the response of the economy to reforms in both labour and product markets. The reforms are two-fold. We assume that the wage mark-up, ie the monopoly power of wage-setters is gradually reduced by 5 percentage points. At the...
Persistent link: https://www.econbiz.de/10014224531
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Money Growth and Inflation : International Historical Evidence on High Inflation Episodes for Developed Countries
Gallegati, Marco - 2019
episodes for the unit slope finding in the quantity theory of money? To answer these questions we study the relationship … coefficients but not the closeness of the long-run relationship call for a qualification of the Quantity Theory of Money and …
Persistent link: https://www.econbiz.de/10012895133