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The Inflation-Output Trade-off with Downward Wage Rigidities
Benigno, Pierpaolo - 2010
consequences of their current wage choices, when facing both idiosyncratic and aggregate shocks. We derive a closed-form solution for a long-run Phillips curve which relates average output gap to average wage inflation: it is virtually vertical at high inflation and flattens at low inflation....
Persistent link: https://www.econbiz.de/10012462893
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Expectation Traps and Discretion
Chari, V. V. - 1996
We argue that discretionary monetary policy exposes the economy to welfare-decreasing instability. It does so by creating the potential for private expectations about the response of monetary policy to exogenous shocks to be self-fulfilling. Among the many equilibria that are possible, some have...
Persistent link: https://www.econbiz.de/10012473315
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Monetary Policy through Production Networks : Evidence from the Stock Market
Ozdagli, Ali - 2017
Monetary policy shocks have a large impact on stock returns in narrow windows around press releases by the Federal Reserve. We use spatial autoregressions to decompose the overall effect of monetary policy shocks into a direct effect and an indirect (network) effect. We attribute 50%-85% of the...
Persistent link: https://www.econbiz.de/10012455257
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Endogenous Volatility at the Zero Lower Bound : Implications for Stabilization Policy
Basu, Susanto - 2015
At the zero lower bound, the central bank's inability to offset shocks endogenously generates volatility. In this setting, an increase in uncertainty about future shocks causes significant contractions in the economy and may lead to non-existence of an equilibrium. The form of the monetary...
Persistent link: https://www.econbiz.de/10012456833
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Does Inflation Targeting Increase Output Volatility? An International Comparison of Policymakers' Preferences and Outcomes
Cecchetti, Stephen G. - 1999
Aggregate shocks that move output and inflation in opposite directions create a tradeoff between output and inflation variability, forcing central bankers to make a choice. Differences in the degree of accommodation of shocks lead to disparate variability outcomes, revealing national central...
Persistent link: https://www.econbiz.de/10012471355
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The Stock Market and Capital Accumulation
Hall, Robert E. - 1999
If firms purchase capital up to the point where there is no further marginal benefit, and the firms' securities are equal in value to the capital, then the market value of securities measures the quantity of capital. I explore the implications of this hypothesis using data from U.S. non-farm,...
Persistent link: https://www.econbiz.de/10012471608
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Uncertainty and Monetary Policy During Extreme Events
Pellegrino, Giovanni - 2020
activity to a financial uncertainty shock during the great recession. We replicate this evidence with an estimated DSGE … real activity of an uncertainty shock under different Taylor rules estimated with normal times vs. great recession data … (the latter associated with a stronger response to output). We find that the uncertainty shock-induced output loss …
Persistent link: https://www.econbiz.de/10012822498
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Uncertainty and Monetary Policy in Good and Bad Times : A Replication of the VAR Investigation by Bloom (2009)
Caggiano, Giovanni - 2020
an uncertainty shock. We find a significantly stronger response of real activity in recessions. Counterfactual …
Persistent link: https://www.econbiz.de/10012824829
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Inflation, Monetary Policy and Stock Market Conditions
Bordo, Michael D. - 2008
This paper examines the association between inflation, monetary policy and U.S. stock market conditions during the second half of the 20th century. We estimate a latent variable VAR to examine how macroeconomic and policy shocks affect the condition of the stock market. Further, we examine the...
Persistent link: https://www.econbiz.de/10012464627
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Does Expansionary Monetary Policy Cause Asset Price Booms; Some Historical and Empirical Evidence
Bordo, Michael D. - 2013
In this paper we investigate the relationship between loose monetary policy, low inflation, and easy bank credit with asset price booms. Using a panel of up to 18 OECD countries from 1920 to 2011 we estimate the impact that loose monetary policy, low inflation, and bank credit has on house,...
Persistent link: https://www.econbiz.de/10012459076