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Coordination and Crisis in Monetary Unions

Aguiar, Mark - 2014

We characterize fiscal and monetary policy in a monetary union with the potential for rollover crises in sovereign debt markets. Member-country fiscal authorities lack commitment to repay their debt and choose fiscal policy independently. A common monetary authority chooses inflation for the...

Persistent link: https://www.econbiz.de/10012458389

A Model of the Safe Asset Mechanism (SAM) : Safety Traps and Economic Policy

Caballero, Ricardo J. - 2013

. Safety traps share many common features with conventional liquidity traps, but also exhibit important differences, in …

Persistent link: https://www.econbiz.de/10012459925

An equilibrium model of "global imbalances" and low interest rates

Caballero, Ricardo J.; Farhi, Emmanuel; Gourinchas, … - In: The American economic review 98 (2008) 1, pp. 358-393

Persistent link: https://www.econbiz.de/10003740673

Competing Liquidities : Corporate Securities, Real Bonds and Bubbles

Farhi, Emmanuel - 2008

We explore the link between liquidity and investment in a an overlapping generation model with a standard … this asynchronicity, resulting in credit rationing and a net demand for stores of value -- liquidity -- by the corporate … sector. At the heart of the model is a distinction between inside liquidity -- liquidity created within the private sector …

Persistent link: https://www.econbiz.de/10012464692

A Theory of Liquidity and Regulation of Financial Intermediation

Farhi, Emmanuel - 2007

simple regulation -- a liquidity requirement -- that corrects such an externality by affecting the interest rate on the … markets. We characterize the form of the optimal liquidity adequacy requirement for a general class of preferences. We show … that whether markets underprovide or overprovide liquidity, and whether a liquidity cap or a liquidity floor should be used …

Persistent link: https://www.econbiz.de/10012465697

Unconventional Fiscal Policy at the Zero Bound

Correia, Isabel - 2011

When the zero lower bound on nominal interest rates binds, monetary policy cannot provide appropriate stimulus. We show that in the standard New Keynesian model, tax policy can deliver such stimulus at no cost and in a time-consistent manner. There is no need to use inefficient policies such as...

Persistent link: https://www.econbiz.de/10012461899

Fiscal Multipliers : Liquidity Traps and Currency Unions

Farhi, Emmanuel - 2012

We provide explicit solutions for government spending multipliers during a liquidity trap and within a fixed exchange … regime using standard closed and open-economy models. We confirm the potential for large multipliers during liquidity traps …

Persistent link: https://www.econbiz.de/10012460278

Fiscal Unions

Werning, Ivan - 2012

We study cross-country risk sharing as a second-best problem for members of a currency union using an open economy model with nominal rigidities and provide two key results. First, we show that if financial markets are incomplete, the value of gaining access to any given level of aggregate risk...

Persistent link: https://www.econbiz.de/10012460383

Fiscal Devaluations

Farhi, Emmanuel - 2011

We show that even when the exchange rate cannot be devalued, a small set of conventional fiscal instruments can robustly replicate the real allocations attained under a nominal exchange rate devaluation in a dynamic New Keynesian open economy environment. We perform the analysis under...

Persistent link: https://www.econbiz.de/10012460995

Leverage and the central banker's put

Farhi, Emmanuel; Tirole, Jean - In: The American economic review 99 (2009) 2, pp. 589-593

Persistent link: https://www.econbiz.de/10003855189