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Costly Adjustment and Limited Borrowing : a Welfare Analysis of Policiesto Achieve External Balance

Aizenman, Joshua - 2008

This paper develops an analytical framework for the analysis of adjustment to adverse shocks in the presence of limited access to the international credit market. We consider an economy producing traded and non-traded goods and experiencing a permanent, unanticipated drop in the availability of...

Persistent link: https://www.econbiz.de/10012774617

Stochastic Devaluation Risk and the Empirical Fit of Target Zone Models

Bertola, Giuseppe - 2008

This paper proposes a tractable and realistic nonlinear model of exchange rate dynamics, and argues that its predictions are consistent with available empirical evidence on exchange rate and interest differential behavior in real-life target zones. In our model, the exchange rate fluctuates...

Persistent link: https://www.econbiz.de/10012774856

International Portfolio Diversification with Generalized Expected Utility Preferences

Aizenman, Joshua - 2008

This paper revisits the Home Bias Puzzle -- the relatively low interna- tional diversification of portfolios. We suggest that part of the diversifi- cation puzzle may be due to reliance on the conventional CAPM model as the benchmark predicting patterns of diversification. We compare the asset...

Persistent link: https://www.econbiz.de/10012774958

New Activities, the Welfare Cost of Uncertainty and Investment Policies

Aizenman, Joshua - 2008

This paper studies the effect of policy uncertainty on the formation of new activities in Romer's (1994) type of an economy, where productivity of labor increases with the number of capital goods. Adding a new capital good requires a capital specific set-up cost, invested prior to using the...

Persistent link: https://www.econbiz.de/10012774962

Capital Markets Integration, Volatility and Persistence

Aizenman, Joshua - 2008

This paper shows that volatility induces adverse first order welfare effects in countries excluded from the global capital market. This result is illustrated in a model characterized by gains from a greater division of activities, where shocks are persistent. We show that non-linearities...

Persistent link: https://www.econbiz.de/10012774994

Leaning against the wind : the role of different assumptions about the costs

Svensson, Lars E. O. - 2017

Persistent link: https://www.econbiz.de/10011735077

The Equilibrium Degree of Transparency and Control in Monetary Policy

Faust, Jon; Svensson, Lars E. O. - 2022

We examine a central bank's endogenous choice of degree of control and degree of transparency, under both commitment and discretion. Under commitment, we find that the deliberate choice of sloppy control is far less likely under a standard central-bank loss function than reported for a less...

Persistent link: https://www.econbiz.de/10014157375

Inflation Forecast Targeting : Implementing and Monitoring Inflation Targets

Svensson, Lars E. O. - 2011

Inflation targeting is shown to imply inflation forecast targeting: the central bank's inflation forecast becomes an explicit intermediate target. Inflation forecast targeting simplifies both implementation and monitoring of monetary policy. The weight on output stabilization determines how...

Persistent link: https://www.econbiz.de/10013125561

Liquidity Traps and Expectation Dynamics : Fiscal Stimulus or Fiscal Austerity?

Benhabib, Jess - 2012

We examine global dynamics under infinite-horizon learning in New Keynesian models where the interest-rate rule is subject to the zero lower bound. As in Evans, Guse and Honkapohja (2008), the intended steady state is locally but not globally stable. Unstable deflationary paths emerge after...

Persistent link: https://www.econbiz.de/10013106020

Financial Crisis and the Paradox of Under- and Over-Regulation

Aizenman, Joshua - 2010

asymmetric information, as is the case when the public does not observe regulator's effort. Higher regulator effort, while … mitigates the above concerns, including information disclosure; increasing the independence of the regulatory agency from the … prudential regulations and information disclosure, enforced by the domestic regulator …

Persistent link: https://www.econbiz.de/10013152612