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Monetary Policy and Stock Market Booms
Christiano, Lawrence J. - 2010
Historical data and model simulations support the following conclusion. Inflation is low during stock market booms, so that an interest rate rule that is too narrowly focused on inflation destabilizes asset markets and the broader economy. Adjustments to the interest rate rule can remove this...
Persistent link: https://www.econbiz.de/10013137616
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Monetary Policy with Opinionated Markets
Caballero, Ricardo J.; Simsek, Alp - 2022
Central banks (the Fed) and markets (the market) often disagree about the path of interest rates. We develop a model where these different views stem from disagreements between the Fed and the market about future aggregate demand. We then study the implications of these disagreements for...
Persistent link: https://www.econbiz.de/10013300933
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Quantitative Easing : A Rationale and Some Evidence from Japan
Wieland, Volker - 2010
. Deflation subsided by 2005. As soon as inflation appeared to stabilize near a rate of zero, the Bank of Japan rapidly reduced … of recent announcements regarding direct asset purchases by the Bank of England, the Bank of Japan, the U.S. Federal … Reserve and the European Central Bank. Empirical evidence from the previous period of quantitative easing in Japan between …
Persistent link: https://www.econbiz.de/10013149980
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Implementation of Monetary Policy : How Do Central Banks Set Interest Rates?
Friedman, Benjamin M. - 2010
-system, or Japan. Structural estimates of banks' reserve demand, at a frequency corresponding to the required reserve maintenance … period, show no interest elasticity for the U.S. or the Euro-system (but some elasticity for Japan). The chapter next …
Persistent link: https://www.econbiz.de/10013141286
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Monetary Exchange in Over-the-Counter Markets : A Theory of Speculative Bubbles, the Fed Model, and Self-Fulfilling Liquidity Crises
Lagos, Ricardo - 2015
We develop a model of monetary exchange in over-the-counter markets to study the effects of monetary policy on asset prices and standard measures of financial liquidity, such as bid-ask spreads, trade volume, and the incentives of dealers to supply immediacy, both by participating in the...
Persistent link: https://www.econbiz.de/10013015987
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Leverage and Asset Bubbles : Averting Armageddon with Chapter 11?
Miller, Marcus H. - 2010
An iconic model with high leverage and overvalued collateral assets is used to illustrate the amplification mechanism driving asset prices to 'overshoot' equilibrium when an asset bubble bursts--threatening widespread insolvency and what Richard Koo calls a 'balance sheet recession'. Besides...
Persistent link: https://www.econbiz.de/10013145248
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Monetary Policy Spillovers and the Trilemma in the New Normal : Periphery Country Sensitivity to Core Country Conditions
Aizenman, Joshua - 2015
) can be affected by the movements in the center economies - the U.S., Japan, the Eurozone, and China. We apply a two …
Persistent link: https://www.econbiz.de/10013023347
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Asset Price Inflation and Monetary Policy
Schwartz, Anna J. - 2021
It is crucial that central banks and regulatory authorities be aware of effects of asset price inflation on the stability of the financial system. Lending activity based on asset collateral during the boom is hazardous to the health of lenders when the boom collapses. One way that authorities...
Persistent link: https://www.econbiz.de/10013222893
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A New Keynesian Perspective on the Great Recession
Ireland, Peter N. - 2010
With an estimated New Keynesian model, this paper compares the "Great Recession" of 2007-09 to its two immediate predecessors in 1990-91 and 2001. The model attributes all three downturns to a similar mix of aggregate demand and supply disturbances. The most recent series of adverse shocks...
Persistent link: https://www.econbiz.de/10013137590
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The Effects of Quantitative Easing on Interest Rates : Channels and Implications for Policy
Krishnamurthy, Arvind - 2011
We evaluate the effect of the Federal Reserve's purchase of long-term Treasuries and other long-term bonds ("QE1" in 2008-2009 and "QE2" in 2010-2011) on interest rates. Using an event-study methodology we reach two main conclusions. First, it is inappropriate to focus only on Treasury rates as...
Persistent link: https://www.econbiz.de/10013118848