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FTPL and the Maturity Structure of Government Debt in the New Keynesian Model

Liemen, Max Ole; Posch, Olaf - 2022

inflation dynamics. Our results illustrate the role of the maturity of existing debt in the wake of skyrocketing debt …In this paper, we revisit the fiscal theory of the price level (FTPL) within the New Keynesian (NK) model. We show in … which cases the average maturity of government debt matters for the transmission of policy shocks. The central task of this …

Persistent link: https://www.econbiz.de/10014080233

The Euro Area Periphery Sovereigns' Fiscal Positions and Unconventional Monetary Policy

Hülsewig, Oliver - 2020

We explore the reaction of the euro area periphery sovereigns' fiscal positions to an unconventional monetary policy shock. We estimate panel vector autoregressive (VAR) models over the period 2010-2018, and identify the shock by imposing sign restrictions. Our results suggest that the...

Persistent link: https://www.econbiz.de/10012843420

The Liquidity Channel of Fiscal Policy

Bayer, Christian - 2020

—the liquidity premium. We rationalize this finding in an estimated heterogeneous-agent New-Keynesian (HANK) model with incomplete … markets and portfolio choice, in which public debt affects private liquidity. In this environment, the short-run fiscal … multiplier is amplified by the countercyclical liquidity premium. This liquidity channel stabilizes investment and crowds in …

Persistent link: https://www.econbiz.de/10012830353

Monetary Policy, Price Setting, and Credit Constraints

Balleer, Almut - 2019

We estimate the effects of monetary policy on price-setting behavior in administrative micro data underlying the German producer price index. We find a strong degree of monetary non-neutrality. After expansionary monetary policy, the mass of additional price adjustments is economically small and...

Persistent link: https://www.econbiz.de/10012857905

To React or Not? Fiscal Policy, Volatility and Welfare in the EU-3

Malley, Jim - 2008

This paper develops a dynamic stochastic general equilibrium model to examine the quantitative macroeconomic implications of countercyclical fiscal policy for France, Germany and the UK. The model incorporates real wage rigidity which is the particular market failure justifying policy...

Persistent link: https://www.econbiz.de/10012773638

The Term Structure of Interest Rates in a Heterogeneous Monetary Union

Costain, James S.; Nuno, Galo; Thomas, Carlos - 2022

We build a no-arbitrage model of the yield curves in a heterogeneous monetary union with sovereign default risk, which can account for the asymmetric shifts in euro area yields during the Covid-19 pandemic. We derive an affine term structure solution, and decompose yields into term premium and...

Persistent link: https://www.econbiz.de/10014080055

Government budget deficits in large open economies

Buiter, Willem H.; Sibert, Anne C. - 2011

Large and growing levels of public debt in the United States, United Kingdom, Japan and the Euro Area raise new interest in the cross-country effects of a large open economy's deficits. We consider a dynamic optimising model with costly tax collection and exogenously given public spending and...

Persistent link: https://www.econbiz.de/10010274920

How to Escape from the Debt Trap : Lessons from the Past

Mayer, Thomas; Schnabl, Gunther - 2021

precedents and proposals have included austerity, haircuts and the generation of inflation. Each way has advantages and …, hyperinflation in Germany after World War I, inflation in Argentina since the 1980s, currency reform in Germany after WW II, and …

Persistent link: https://www.econbiz.de/10013227606

The Fiscal Theory of the Price Level with a Bubble

Brunnermeier, Markus K. - 2020

primary surpluses can have a positively valued currency and low inflation. It also provides an example with closed …

Persistent link: https://www.econbiz.de/10012834354

Designing the Policy Mix in a Monetary Union

Kempf, Hubert - 2020

This paper studies the design of the policy mix in a monetary union, that is, the institutional arrangement specifying the relationships between the various policymakers present in the union and the extent of their capacity of action. It is assumed that policymakers do not cooperate. Detailing...

Persistent link: https://www.econbiz.de/10012832189

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