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of the New Keynesian Phillips Curve (NKPC) is that they fail to capture the extent of inflation inertia in the data. In …
Persistent link: https://www.econbiz.de/10011409738
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...
Persistent link: https://www.econbiz.de/10009772961
In our dynamic optimizing sticky price model, agents are heterogeneous with regard to their age and their productivity. We find that the business cycle dynamics in the OLG model in response to both a technology shock and a monetary shock are similar, but not completely identical to those found...
Persistent link: https://www.econbiz.de/10003301356
How much does inequality matter for the business cycle and vice versa? Using a Bayesian likelihood approach, we estimate a heterogeneous-agent New-Keynesian (HANK) model with incomplete markets and portfolio choice between liquid and illiquid assets. The model enlarges the set of shocks and...
Persistent link: https://www.econbiz.de/10012162730
This paper studies the challenge that increasing the inflation target poses to equilibrium determinacy in a medium …-sized New Keynesian model without indexation fitted to the Great Moderation era. For moderate targets of the inflation rate …
Persistent link: https://www.econbiz.de/10011864684
-term nominal bonds and costly inflation. Our model features two transmission channels of monetary policy: a Fisher channel, arising … from the impact of inflation on the initial price of long-term bonds, and a liquidity channel. The Fisher channel gives the … prices and thus relax borrowing limits. The result is optimal inflation front-loading. Numerically, we find that optimal …
Persistent link: https://www.econbiz.de/10012308600
': the interaction between high trend inflation and firms' upward price bias magnifies the effects of uncertainty by …We study how uncertainty shocks affect the macroeconomy across the inflation cycle using a nonlinear stochastic … volatility-in-mean VAR. When inflation is high, uncertainty shocks raise inflation and depress real activity more sharply. A non …
Persistent link: https://www.econbiz.de/10015396830
Persistent link: https://www.econbiz.de/10003499532
In this note we elaborate on the effect of the modeling choice of the zero lower bound on the size of the fiscal multiplier. To this end we contrast two different ways to implement the ZLB in a New Keynesian model: the ZLB modeled as an endogenous central bank reaction to a contractionary demand...
Persistent link: https://www.econbiz.de/10009772911
interest rate is set as a function of the deviation of the inflation rate from its target rate, the output gap, and Tobin's q …
Persistent link: https://www.econbiz.de/10011451285