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The Optimal Conduct of Central Bank Asset Purchases

Darracq Paries, Matthieu - 2017

We analyse the effects of central bank government bond purchases in an estimated DSGE model for the euro area. In the model, central bank asset purchases are relevant in so far as agency costs distort banks asset allocation between loans and bonds, and households face transaction costs when...

Persistent link: https://www.econbiz.de/10012965539

Optimal Monetary Policy, Asset Purchases, and Credit Market Frictions

Schabert, Andreas - 2014

This paper examines how credit market frictions affect optimal monetary policy and if there is a role for central bank asset purchases. We develop a sticky price model where money serves as the means of payment and ex-ante identical agents borrow/lend among each other. The credit market is...

Persistent link: https://www.econbiz.de/10013045600

The Risky Steady State and the Interest Rate Lower Bound

Hills, Timothy - 2016

constrained by the ELB in the future lowers today's inflation by creating tail risk in future inflation and thus reducing expected … inflation. In an empirically rich model calibrated to match key features of the U.S. economy, we find that the tail risk induced … by the ELB causes inflation to undershoot the target rate of 2 percent by as much as 45 basis points at the economy …

Persistent link: https://www.econbiz.de/10012988551

Monetary Policy According to HANK

Kaplan, Greg - 2016

We revisit the transmission mechanism of monetary policy for household consumption in a Heterogeneous Agent New Keynesian (HANK) model. The model yields empirically realistic distributions of household wealth and marginal propensities to consume because of two key features: multiple assets with...

Persistent link: https://www.econbiz.de/10012992430

Conservatism and Liquidity Traps

Nakata, Taisuke - 2015

creates a trade-off for discretionary central banks between inflation and output stabilization. As a consequence, inflation …

Persistent link: https://www.econbiz.de/10013020587

Collateral Damage? Micro-Simulation of Transaction Cost Shocks on the Value of Central Bank Collateral

Lennkh, Alvise - 2015

Transaction cost shocks in financial markets are known to affect asset prices. This paper analyses how changes in transaction costs may affect the value of assets that banks use to collateralise borrowings in monetary policy operations. Based on a simple asset pricing model and employing a...

Persistent link: https://www.econbiz.de/10013020666

Policy Mandates for Macro-Prudential and Monetary Policies in a New Keynesian Framework

Levine, Paul - 2015

In the aftermath of the financial crisis, the role of monetary policy and macro-prudential regulation in promoting financial stability is under discussion. The old debate concerning whether monetary policy should respond to credit and asset price bubbles was revived, whereas macro-prudential...

Persistent link: https://www.econbiz.de/10013020791

Employment, Hours and Optimal Monetary Policy

Dossche, Maarten - 2014

margin at the expense of hiring, which makes hours too volatile. The Ramsey planner uses inflation as an instrument to dampen …

Persistent link: https://www.econbiz.de/10013049851

Discretion Rather than Rules? When is Discretionary Policy-Making Better than the Timeless Perspective?

Sauer, Stephan - 2007

Discretionary monetary policy produces a dynamic loss in the New Keynesian model in the presence of cost-push shocks. The possibility to commit to a specific policy rule can increase welfare. A number of authors since Woodford (1999) have argued in favour of a timeless perspective rule as an...

Persistent link: https://www.econbiz.de/10012778005

Quantifying and Sustaining Welfare Gains from Monetary Commitment

Levine, Paul - 2007

that a simple optimized commitment rule with the nominal interest rate responding to current inflation and the real wage …

Persistent link: https://www.econbiz.de/10012778040