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A Theory of Macroprudential Policies in the Presence of Nominal Rigidities
Farhi, Emmanuel - 2013
We propose a theory of monetary policy and macroprudential interventions in financial markets. We focus on economies … externalities. Finally, we provide a number of applications which illustrate the relevance of our theory …
Persistent link: https://www.econbiz.de/10012459349
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Monetary Policy, Bounded Rationality, and Incomplete Markets
Farhi, Emmanuel - 2017
This paper extends the benchmark New-Keynesian model with a representative agent and rational expectations by introducing two key frictions: (1) agent heterogeneity with incomplete markets, uninsurable idiosyncratic risk, and occasionally-binding borrowing constraints; and (2) bounded...
Persistent link: https://www.econbiz.de/10012455400
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Coordination and Crisis in Monetary Unions
Aguiar, Mark - 2014
We characterize fiscal and monetary policy in a monetary union with the potential for rollover crises in sovereign debt markets. Member-country fiscal authorities lack commitment to repay their debt and choose fiscal policy independently. A common monetary authority chooses inflation for the...
Persistent link: https://www.econbiz.de/10012458389
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A Model of the Safe Asset Mechanism (SAM) : Safety Traps and Economic Policy
Caballero, Ricardo J. - 2013
The global economy has a chronic shortage of safe assets which lies behind many recent macroeconomic imbalances. This paper provides a simple model of the Safe Asset Mechanism (SAM), its recessionary safety traps, and its policy antidotes. Safety traps share many common features with...
Persistent link: https://www.econbiz.de/10012459925
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Rare Disasters and Exchange Rates
Farhi, Emmanuel - 2008
We propose a new model of exchange rates, which yields a theory of the forward premium puzzle. Our explanation combines …
Persistent link: https://www.econbiz.de/10012464842
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Productivity and Misallocation in General Equilibrium
Baqaee, David Rezza - 2017
impact of a shock can be boiled down into two components: its "pure" technology effect; and its effect on allocative …
Persistent link: https://www.econbiz.de/10012453706
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Dealing with the Trilemma : Optimal Capital Controls with Fixed Exchange Rates
Farhi, Emmanuel - 2012
We lay down a standard macroeconomic model of a small open economy with a fixed exchange rate and study optimal capital controls (defined as maximizing the utility of a representative household). We provide sharp analytical and numerical characterizations for a variety of shocks. We find that...
Persistent link: https://www.econbiz.de/10012460461
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The Supply-Side Effects of Monetary Policy
Baqaee, David; Farhi, Emmanuel; Sangani, Kunal - National Bureau of Economic Research - 2021
improves allocative efficiency. This endogenous positive "supply shock" amplifies the effects of the positive "demand shock" on …
Persistent link: https://www.econbiz.de/10012482563
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Monetary Policy, Liquidity, and Growth
Aghion, Philippe - 2012
In this paper, we use cross-industry, cross-country panel data to test whether industry growth is positively affected by the interaction between the reactivity of real short term interest rates to the business cycle and industry-level measures of financial constraints. Financial constraints are...
Persistent link: https://www.econbiz.de/10012460587
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Keynesian Production Networks and the Covid-19 Crisis : A Simple Benchmark
Baqaee, David; Farhi, Emmanuel - National Bureau of Economic Research - 2021
The Covid-19 crisis is an unusual and seemingly all-encompassing economic shock. On the one hand, it was unquestionably … a negative demand shock that, for fixed prices and incomes, reduced household spending. On the other hand, it was also … unquestionably a negative supply shock that reduced firms' ability to maintain production at pre-pandemic prices and quantities …
Persistent link: https://www.econbiz.de/10012482564