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The Collateral Premium and Levered Safe-Asset Production
Ross, Chase P. - 2022
Banks are vital suppliers of money-like safe assets, which they produce by issuing short-term liabilities and pledging collateral. But their ability to create safe assets varies over time as leverage constraints fluctuate. I present a model to describe private safe-asset production when...
Persistent link: https://www.econbiz.de/10013404301
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Capacity Choice, Monetary Trade, and the Cost of Inflation
Baughman, Garth - 2020
Firms often make production decisions before meeting a buyer. We incorporate this often-overlooked fact into an otherwise standard monetary search model and show that it has important implications for the set of equilibria, efficiency, and the cost of inflation. Our model features a strategic...
Persistent link: https://www.econbiz.de/10012834047
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Self-confirming price dispersion in monetary economies
Baughman, Garth; Rabinovich, Stanislav - 2018
In a monetary economy, we show that price dispersion arises as an equilibrium outcome without the need for costly simultaneous search or any heterogeneity in preferences, production costs, or search technologies. A distribution of money holdings among buyers makes sellers indifferent across a...
Persistent link: https://www.econbiz.de/10011932364
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Inflation Dynamics During the Financial Crisis
Gilchrist, Simon - 2015
Firms with limited internal liquidity significantly increased prices in 2008, while their liquidity unconstrained …. These results reflect the firms' reaction to preserve internal liquidity and avoid accessing external finance, factors that …
Persistent link: https://www.econbiz.de/10013024237
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Non-Linear Phillips Curves with Inflation Regime-Switching
Nalewaik, Jeremy - 2016
Building on the results in Nalewaik (FEDS 2015-93), this work models wage growth and core PCE price inflation as regime-switching processes, whose characteristics in the 1970s, 1980s and early 1990s differ fundamentally from their characteristics in the 1960s and from the mid-1990s to present....
Persistent link: https://www.econbiz.de/10013210454
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The costs and benefits of liquidity regulations : lessons from an idle monetary policy tool
Curfman, Christopher J.; Kandrac, John - 2019
We investigate how liquidity regulations affect banks by examining a dormant monetary policy tool that functions as a … liquidity regulation. Our identification strategy uses a regression kink design that relies on the variation in a marginal high … credit supply. Liquidity requirements also depress banks' profitability, though some of the regulatory costs are passed on to …
Persistent link: https://www.econbiz.de/10012181216
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Nonlinear Unemployment Effects of the Inflation Tax
Ait Lahcen, Mohammed; Baughman, Garth; Rabinovich, Stanislav - 2021
We argue that long-run inflation has nonlinear and state-dependent effects on unemployment, output, and welfare. Using panel data from the OECD, we document three correlations. First, there is a positive long-run relationship between anticipated inflation and unemployment. Second, there is also...
Persistent link: https://www.econbiz.de/10013219614
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The Effect of the China Connect
Ma, Chang; Rogers, John H.; Zhou, Sili - 2021
We document the effect on Chinese firms of the Shanghai (Shenzhen)-Hong Kong Stock Connect. The Connect was an important capital account liberalization introduced in the mid-2010s. It created a channel for cross-border equity investments into a selected set of Chinese stocks while China's...
Persistent link: https://www.econbiz.de/10013225114
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Monetary Policy and the Corporate Bond Market : How Important is the Fed Information Effect?
Smolyansky, Michael; Suarez, Gustavo - 2021
Does expansionary monetary policy drive up prices of risky assets? Or, do investors interpret monetary policy easing as a signal that economic fundamentals are weaker than they previously believed, prompting riskier asset prices to fall? We test these competing hypotheses within the U.S....
Persistent link: https://www.econbiz.de/10013231924
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Global Stablecoins : Monetary Policy Implementation Considerations from the U.S. Perspective
Malloy, Matthew; Lowe, David - 2021
This note explores the potential effects of the widespread adoption of a global stablecoin (GSC) on key aggregate financial sector balance sheets in the United States. To do this, we map out cash flows of GSC transactions among financial sector entities using a stylized set of 't-accounts'. By...
Persistent link: https://www.econbiz.de/10013231947