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Monetary policy and asset price overshooting: a rationale for the Wall/Main Street disconnect

Caballero, Ricardo J.; Simsek, Alp - 2022

We analyze optimal monetary policy and its implications for asset prices, when aggregate demand has inertia and responds to asset prices with a lag. If there is a negative output gap, the central bank optimally overshoots aggregate asset prices (asset prices are initially pushed above their...

Persistent link: https://www.econbiz.de/10013093040

Short and Long Run Externalities

Bartelsman, Eric J. - 1991

providing new evidence helpful for discriminating between different types of externalities. We investigate four-digit level … most important factor in the transmission of externalities. This suggests that transactions externalities accruing … primarily to the seller, and/or activity-driven demand externalities are significant for explaining the short-run behavior of …

Persistent link: https://www.econbiz.de/10012475186

The Role of External Economies in U.S. Manufacturing

Caballero, Ricardo J. - 1989

This paper develops a method for joint estimation of both the degree of internal returns to scale and the extent of external economies. We apply the method in estimating returns to scale indexes for U.S. manufacturing industries at the two-digit level. Overall, we find that only three of the...

Persistent link: https://www.econbiz.de/10012476015

An Equilibrium Model of "Global Imbalances" and Low Interest Rates

Caballero, Ricardo J. - 2006

Three of the most important recent facts in global macroeconomics -- the sustained rise in the US current account deficit, the stubborn decline in long run real rates, and the rise in the share of US assets in global portfolio -- appear as anomalies from the perspective of conventional wisdom...

Persistent link: https://www.econbiz.de/10012466674

A Monetary Policy Asset Pricing Model

Caballero, Ricardo J.; Simsek, Alp - National Bureau of Economic Research - 2022

We propose a model where monetary policy is the key determinant of aggregate asset prices (financial conditions). Spending decisions are made by a group of agents ("households") that respond to aggregate asset prices, but with noise, delays, and inertia. Asset pricing is determined by a...

Persistent link: https://www.econbiz.de/10013334351

Dollarization of Liabilities : Underinsurance and Domestic Financial Underdevelopment

Caballero, Ricardo J. - 2000

While there is still much disagreement on the causes underlying recent emerging markets' crises, one factor that most observers have agreed upon is that contracting dollar' (foreign currency) denominated external debt as opposed to domestic currency debt created balance sheet mismatches that led...

Persistent link: https://www.econbiz.de/10012470958

International Liquidity Management : Sterilization Policy in Illiquid Financial Markets

Caballero, Ricardo J. - 2000

During the booms that precede crises in emerging economies, policy makers often struggle to limit capital flows and their expansionary consequences. The main policy tool for this task is sterilization - essentially a swap of international reserves for public bonds. However, there is an extensive...

Persistent link: https://www.econbiz.de/10012471010

Institutions, Restructuring, and Macroeconomic Performance

Caballero, Ricardo J. - 2000

A growing body of new research has emphasized the macroeconomic consequences of transactional impediments in factor markets, and their role in the recurrent restructuring requirements of modern economies. We first review the function institutional arrangements play in facilitating transactions...

Persistent link: https://www.econbiz.de/10012471041

The Cost of Recessions Revisited : A Reverse-Liquidationist View

Caballero, Ricardo J. - 1999

of theory and empirical evidence on gross job flows and on financial and labor market rents, we find that, cumulatively …

Persistent link: https://www.econbiz.de/10012471429

Monetary Policy and Asset Price Overshooting : A Rationale for the Wall/Main Street Disconnect

Caballero, Ricardo J. - 2020

We analyze optimal monetary policy when asset prices influence aggregate demand with a lag (as is well documented). In this context, as long as the central bank's main objective is to minimize the output gap, the central bank optimally induces asset price overshooting in response to the...

Persistent link: https://www.econbiz.de/10012481260