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Optimal Simple and Implementable Monetary and Fiscal Rules : Expanded Version

Schmitt-Grohé, Stephanie - 2006

This paper computes welfare-maximizing monetary and fiscal policy rules in a real business cycle model augmented with sticky prices, a demand for money, taxation, and stochastic government consumption. We consider simple feedback rules whereby the nominal interest rate is set as a function of...

Persistent link: https://www.econbiz.de/10012779616

Managing Currency Pegs

Schmitt-Grohé, Stephanie; Uribe, Martín - 2021

The combination of a fixed exchange rate and downward nominal wage rigidity creates a real rigidity. In turn, this real rigidity makes the economy prone to involuntary unemployment during external crises. This paper presents a graphical analysis of alternative policy strategies aimed at...

Persistent link: https://www.econbiz.de/10013224397

Optimal Fiscal and Monetary Policy in a Medium-Scale Macroeconomic Model : Expanded Version

Schmitt-Grohé, Stephanie; Uribe, Martín - 2021

In this paper, we study Ramsey-optimal fiscal and monetary policy in a medium-scale model of the U.S.\ business cycle. The model features a rich array of real and nominal rigidities that have been identified in the recent empirical literature as salient in explaining observed aggregate...

Persistent link: https://www.econbiz.de/10013240563

Optimal Fiscal and Monetary Policy Under Sticky Prices

Schmitt-Grohé, Stephanie; Uribe, Martín - 2021

This paper studies optimal .scal and monetary policy under sticky product prices. The theoretical framework is a stochastic production economy without capital. The government finances an exogenous stream of purchases by levying distortionary income taxes, printing money, and issuing one-period...

Persistent link: https://www.econbiz.de/10013240611

Optimal Fiscal and Monetary Policy Under Imperfect Competition

Schmitt-Grohé, Stephanie; Uribe, Martín - 2021

This paper studies optimal fiscal and monetary policy under imperfect competition in a stochastic, flexible-price, production economy without capital. It shows analytically that in this economy the nominal interest rate acts as an indirect tax on monopoly profits. Unless the social planner has...

Persistent link: https://www.econbiz.de/10013237034

Liquidity Traps : An Interest-Rate-Based Exit Strategy

Schmitt-Grohé, Stephanie - 2010

This paper analyzes a potential strategy for escaping liquidity traps. The strategy is based on an augmented Taylor …

Persistent link: https://www.econbiz.de/10013136358

Optimal Simple and Implementable Monetary and Fiscal Rules

Schmitt-Grohé, Stephanie; Uribe, Martín - 2021

The goal of this paper is to compute optimal monetary and fiscal policy rules in a real business cycle model augmented with sticky prices, a demand for money, taxation, and stochastic government consumption. We consider simple policy rules whereby the nominal interest rate is set as a function...

Persistent link: https://www.econbiz.de/10013220424

Flights to safety

Baele, Lieven; Bekaert, Geert; Inghelbrecht, Koen; Wei, Min - 2012

Despite a large and growing theoretical literature on flights to safety, there does not appear to exist an empirical characterization of flight-to-safety (FTS) episodes. Using only data on bond and stock returns, we identify and characterize flight to safety episodes for 23 countries. On...

Persistent link: https://www.econbiz.de/10011590578

Liquidity and Expected Returns : Lessons from Emerging Markets

Bekaert, Geert - 2012

Given the cross-sectional and temporal variation in their liquidity, emerging equity markets provide an ideal setting … to examine the impact of liquidity on expected returns. Our main liquidity measure is a transformation of the proportion … of zero daily firm returns, averaged over the month. We find that our liquidity measures significantly predict future …

Persistent link: https://www.econbiz.de/10012755671

Individual Versus Aggregate Collateral Constraints and the Overborrowing Syndrome

Uribe, Martín - 2010

This paper compares the equilibrium dynamics of an economy facing an aggregate collateral constraint on external debt to the dynamics of an economy facing a collateral constraint imposed at the level of each individual agent. The aggregate collateral constraint is intended to capture an...

Persistent link: https://www.econbiz.de/10012761465