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'Interest Rate Trap' : Or: Why Does the Central Bank Keep the Policy Rate Too Low for Too Long Time?
Cao, Jin - 2013
This paper provides a framework for modeling the risk-taking channel of monetary policy, the mechanism how financial …
Persistent link: https://www.econbiz.de/10013091119
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Liquidity Traps and Large-Scale Financial Crisis
Caggiano, Giovanni - 2018
This paper estimates a nonlinear Threshold-VAR to investigate if a Keynesian liquidity trap due to a speculative motive was in place in the U.S. Great Depression and the recent Great Recession. We find clear evidence in favor of a breakdown of the liquidity effect after an unexpected increase in...
Persistent link: https://www.econbiz.de/10012914605
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Policy Risk and the Business Cycle
Born, Benjamin - 2013
The argument that policy risk, i.e., uncertainty about monetary and fiscal policy, has been holding back the economic … recovery in the U.S. during the Great Recession has a large popular appeal. We analyze the role of policy risk in explaining … business cycle fluctuations by using an estimated New Keynesian model featuring policy risk as well as uncertainty about …
Persistent link: https://www.econbiz.de/10013078531
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Animal Spirits and Credit Cycles
De Grauwe, Paul - 2013
In this paper we extend the behavioral macroeconomic model as proposed by De Grauwe (2012) to include a banking sector. The behavioral model takes the view that agents have limited cognitive limitations. As a result, it is rational to use simple forecasting rules and to subject the use of these...
Persistent link: https://www.econbiz.de/10013072502
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Transparency, Flexibility and Macroeconomic Stabilization
Geraats, Petra M. - 2014
Many central banks have become more transparent during the last decade, in particular about macroeconomic prospects. This paper shows that such economic transparency could give central banks greater flexibility to respond to macroeconomic shocks. In particular, it allows central banks to...
Persistent link: https://www.econbiz.de/10013057641
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Optimal Conservatism and Collective Monetary Policymaking Under Uncertainty
Hefeker, Carsten - 2014
We study how the optimal degree of conservatism relates to decision-making procedures in a Monetary Policy Committee (MPC). In our framework, central bank conservatism is required to attenuate the volatility of monetary decisions generated by the presence of uncertainty about the committee...
Persistent link: https://www.econbiz.de/10013047346
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Uncertainty and Fiscal Policy in an Asymmetric Monetary Union
Hefeker, Carsten - 2013
The paper examines the monetary-fiscal interactions in a monetary union model with uncertainty due to imperfect central bank transparency. We first show that monetary uncertainty disciplines fiscal policymakers and thereby reduces taxes, average inflation and output distortions. However, as more...
Persistent link: https://www.econbiz.de/10012753473
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Macroeconomic Uncertainty and the Impact of Oil Shocks
Van Robays, Ine - 2014
This paper evaluates whether macroeconomic uncertainty changes the impact of oil shocks on the oil price. Using a structural threshold VAR model, we endogenously identify different regimes of uncertainty in which we estimate the effects of oil demand and supply shocks. The results show that...
Persistent link: https://www.econbiz.de/10013065379
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Firm-Specific Productivity Risk Over the Business Cycle : Facts and Aggregate Implications
Bachmann, Ruediger - 2009
Is time-varying firm-level uncertainty a major cause or amplifier of the business cycle? This paper investigates this question in the context of a heterogeneous-firm RBC model with persistent firm-level productivity shocks and lumpy capital adjustment, where cyclical changes in uncertainty...
Persistent link: https://www.econbiz.de/10013154684
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Uncertainty and Economic Activity
Cesa-Bianchi, Ambrogio - 2014
The 2007-2008 global financial crisis and the subsequent anemic recovery have rekindled academic interest in quantifying the impact of uncertainty on macroeconomic dynamics based on the premise that uncertainty causes economic activity to slow down and contract. In this paper, we study the...
Persistent link: https://www.econbiz.de/10013054500