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The interest rate is generally considered as an important driver of macroeconomic investment. As an innovation, this paper derives the exact shape of the "hysteretic" impact of changes in the interest rate on macroeconomic investment under the scenarios of both certainty and uncertainty. We...
Persistent link: https://www.econbiz.de/10012099522
We compare the causal effects of forward guidance communication about future interest rates on households' expectations of inflation, mortgage rates, and unemployment to the effects of communication about future inflation in a randomized controlled trial using more than 25,000 U.S. individuals...
Persistent link: https://www.econbiz.de/10012177886
This paper provides new survey evidence on firms' inflation expectations in the euro area. Building on the ECB's Survey on the Access to Finance of Enterprises (SAFE), we introduce consistent measurement of inflation expectations across countries and shed new light on the properties and causal...
Persistent link: https://www.econbiz.de/10014535260
How do firms' plans and expectations respond to macroeconomic shocks? We run a daily survey of German firms over the past three years. We randomize daily invitations, delivering a stable composition of firms. This allows constructing daily time series and estimating dynamic aggregate causal...
Persistent link: https://www.econbiz.de/10015395383
In this paper we incorporate a labor market with matching frictions and wage rigidities into the New Keynesian business cycle model. In particular, we analyze the effect of a monetary policy shock and investigate how labor market frictions affect the transmission process of monetary policy. The...
Persistent link: https://www.econbiz.de/10003227218
The interest rate represents an important monetary policy tool to steer investment in order to reach price stability. Therefore, implications of the exact form and magnitude of the interest rate-investment nexus for the European Central Bank's effectiveness in a low interest rate environment...
Persistent link: https://www.econbiz.de/10012099559
This study analyzes how firms form their inflation expectations during a regime change in monetary policy and a transition to a low-inflation environment. Using the Bank of Israel survey of firms, we document the basic properties of firms' inflation expectations and examine how Israeli firms...
Persistent link: https://www.econbiz.de/10014318218
Real wages are a key determinant of marginal costs. The latter themselves are a driving force of inflation. We ask how wages and labor market shocks feed into the inflation process. We model search and matching frictions in the labour market in an otherwise standard New-Keynesian closed economy...
Persistent link: https://www.econbiz.de/10003229297
We document a new fact: in U.S., European and Japanese surveys, households do not expect deflation, even in … environments where persistent deflation is a strong possibility. This fact stands in contrast to the standard macroeconomic models …
Persistent link: https://www.econbiz.de/10012698646
This paper analyzes the effects of different labor market institutions on inflation and output volatility. The eurozone … and inflation volatility ; labor turnover costs ; unemployment benefits ; unemployment ; eurozone …
Persistent link: https://www.econbiz.de/10003961662