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Optimal Stabilization Policy with Flexible Prices
Berentsen, Aleksander - 2013
We construct a dynamic stochastic general equilibrium model to study optimal monetary stabilization policy. Prices are fully flexible and money is essential for trade. Our main result is that if the central bank pursues a long-run price path, thereby controlling inflation expectations, it can...
Persistent link: https://www.econbiz.de/10012754424
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Optimal Taxation and Constrained Inefficiency in an Infinite-Horizon Economy with Incomplete Markets
Gottardi, Piero; Kajii, Atsushi; Nakajima, Tomoyuki - CESifo - 2011
We study the dynamic Ramsey problem of finding optimal public debt and linear taxes on capital and labor income within a tractable infinite horizon model with incomplete markets. With zero public expenditure and debt, it is optimal to tax the risky labor income and subsidize capital, while a...
Persistent link: https://www.econbiz.de/10009293486
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Illiquidity and Under-Valuation of Firms
Gale, Douglas; Gottardi, Piero - CESifo - 2009
We study a competitive model in which market incompleteness implies that debt-financed firms may default in some states … of nature and default may lead to the sale of the firms’ assets at fire sale prices when markets are illiquid. This … incompleteness is the only friction in the model and the only cost of default. The anticipation of such losses alone may distort …
Persistent link: https://www.econbiz.de/10008572580
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Basel Accord and Financial Intermediation: The Impact of Policy
Berka, Martin; Zimmermann, Christian - CESifo - 2012
tightening of regulation in bad times. This is performed with an heterogeneous agent economy with occupational choice, financial …
Persistent link: https://www.econbiz.de/10009645629
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Liquidity Shortages and Monetary Policy
Cao, Jin; Illing, Gerhard - 2021
The paper models the interaction between risk taking in the financial sector and central bank policy for the case of pure illiquidity risk. It is shown that, when bad states are highly unlikely, public provision of liquidity may improve the allocation, even though it encourages more risk taking...
Persistent link: https://www.econbiz.de/10013316591
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Regulatory Competition in Capital Standards with Selection Effects Among Banks
Haufler, Andreas - 2016
Several countries have recently introduced national capital standards exceeding the internationally coordinated Basel III rules, thus suggesting a ‘race to the top' in capital standards. We study regulatory competition when banks are heterogeneous and give loans to firms that produce output in...
Persistent link: https://www.econbiz.de/10012993695
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The Tragedy of Annuitization
Heijdra, Ben J.; Mierau, Jochen O.; Reijnders, Laurie S. M. - CESifo - 2010
We construct a tractable discrete-time overlapping generations model of a closed economy and use it to study government redistribution of accidental bequests and private annuities in general equilibrium. Individuals face longevity risk as there is a positive probability of passing away before...
Persistent link: https://www.econbiz.de/10008511614
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The Lindahl Equilibrium in Schumpeterian Growth Models: Knowledge Diffusion, Social Value of Innovations and Optimal R&D Incentives
Gray, Elie; Grimaud, André - CESifo - 2014
What is the social value of innovations in Schumpeterian growth models? This issue is tackled by introducing the concept of Lindahl equilibrium in a standard endogenous growth model with vertical innovations which is extended by explicitly considering knowledge diffusion on a Salop (1979)...
Persistent link: https://www.econbiz.de/10010748305
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A Market for Connections
Miettinen, Topi; Poutvaara, Panu - CESifo - 2012
Government or company decisions on whom to hire are mostly delegated to politicians, public sector officials or human resources and procurement managers. Due to anti-corruption laws, agents cannot sell contracts or positions that they are delegated to decide upon. Even if bribing is ruled out,...
Persistent link: https://www.econbiz.de/10010548151
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Annuity Market Imperfection, Retirement and Economic Growth
Heijdra, Ben J.; Mierau, Jochen O. - CESifo - 2009
We study the effects of an annuity market imperfection on individual agents’ labour supply and retirement decisions and on the macroeconomic growth rate in an overlapping generations model with endogenous growth. We model imperfect annuities by introducing a load factor on the interest rate...
Persistent link: https://www.econbiz.de/10005013054