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Lorenzoni, Guido - 2013

What circumstances or policies leave sovereign borrowers at the mercy of self-fulfilling increases in interest rates? To answer this question, we study the dynamics of debt and interest rates in a model where default is driven by insolvency. Fiscal deficits and surpluses are subject to shocks...

Persistent link: https://www.econbiz.de/10013078865

When is the Government Spending Multiplier Large?

Christiano, Lawrence J. - 2010

We argue that the government-spending multiplier can be much larger than one when the zero lower bound on the nominal interest rate binds. The larger is the fraction of government spending that occurs while the nominal interest rate is zero, the larger is the value of the multiplier. After...

Persistent link: https://www.econbiz.de/10013150737

Interest-Rate Smoothing

Barro, Robert J. - 2010

influencing nominal interest rates by altering expected inflation. In this model the monetary authority can come arbitrarily close … behavior for nominal interest rates, growth rates of the monetary base, and rates of inflation. Earlier periods, especially … monetary base and the price level at these times differed from the post-World War I1 experience in ways predicted by the theory …

Persistent link: https://www.econbiz.de/10013139987

Interest Rates and Money in the Measurement of Monetary Policy

Belongia, Michael T. - 2014

Over the last twenty-five years, a set of influential studies has placed interest rates at the heart of analyses that interpret and evaluate monetary policies. In light of this work, the Federal Reserve's recent policy of "quantitative easing," with its goal of affecting the supply of liquid...

Persistent link: https://www.econbiz.de/10013053840

Measuring the Macroeconomic Impact of Monetary Policy at the Zero Lower Bound

Wu, Jing Cynthia - 2014

This paper employs an approximation that makes a nonlinear term structure model extremely tractable for analysis of an economy operating near the zero lower bound for interest rates. We show that such a model offers an excellent description of the data compared to the benchmark model and can be...

Persistent link: https://www.econbiz.de/10013054032

Taxation, Saving and the Rate of Interest

Boskin, Michael J. - 2022

After exploring both the crucial role of the interest elasticity of the saving rate in the analysis of a wide variety of issues in economic - particularly tax - policy and reasons why previous studies of the effect of interest rates on consumption and saving have biased the estimated elasticity...

Persistent link: https://www.econbiz.de/10013321629

The Federal Funds Rate and the Channels of Monetary Transnission

Bernanke, Ben; Blinder, Alan S. - 2021

First, we show that the interest rate on Federal funds is extremely informative about future movements of real macroeconomic variables, more so than monetary aggregates or other interest rates. Next, we argue that the reason for this forecasting is that the funds rate sensitively records shocks...

Persistent link: https://www.econbiz.de/10013219705

Interest Rates and the Design of Financial Contracts

Roberts, Michael R.; Schwert, Michael - 2022

We show that the partial response of loan rates to interest rate changes, referred to in the bank lending literature as “stickiness,” is a feature of perfect capital markets. No-arbitrage models of credit risk are able to replicate empirical interest rate sensitivities. However, the...

Persistent link: https://www.econbiz.de/10013307377

Interest Rate Uncertainty as a Policy Tool

Ghironi, Fabio Pietro; Ozhan, Galip - 2022

We study a novel policy tool—interest rate uncertainty—that can be used to discourage inefficient capital inflows and to adjust the composition of external accounts between short-term securities and foreign direct investment (FDI). We identify the trade-offs faced in navigating between...

Persistent link: https://www.econbiz.de/10013309796

Theoretical Analysis Regarding a Zero Lower Bound on Nominal Interest Rates

McCallum, Bennett T. - 2021

; the magnitude of effects of low sustained inflation on real interest rates; the validity of analyzing monetary policy in …

Persistent link: https://www.econbiz.de/10013310207