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Economic Growth with Constraints on Tax Revenues and Public Debt : Implications for Fiscal Policy and Cross-Country Differences

Aizenman, Joshua - 2007

This paper evaluates optimal public investment and fiscal policy for countries characterized by limited tax and debt capacities. We study a non stochastic CRS endogenous growth model where public expenditure is an input in the production process, in countries where distortions and limited...

Persistent link: https://www.econbiz.de/10012777949

Inflation-Indexed Bonds and the Expectations Hypothesis

Pflueger, Carolin E. - 2011

existing evidence rejecting the EH in nominal bonds. This rejection implies that the risk premium on both real and nominal … premium, or the break-even inflation risk premium, also varies over time. We argue that the time variation in real bond risk … premia mostly likely reflects both a changing real interest rate risk premium and a changing liquidity risk premium, and that …

Persistent link: https://www.econbiz.de/10013127982

Fiscal Limits in Advanced Economies

Leeper, Eric M. - 2011

Aging populations in advanced economies are placing ever-increasing demands on government spending in the form of old-age benefits. Economies that have promised substantially more benefits than they have made provision to finance are heading into a prolonged era of fiscal stress. Unresolved...

Persistent link: https://www.econbiz.de/10013129132

Estimating the Market-Perceived Monetary Policy Rule

Hamilton, James D. - 2010

We introduce a novel method for estimating a monetary policy rule using macroeconomic news. We estimate directly the policy rule agents use to form their expectations by linking news' effects on forecasts of both economic conditions and monetary policy. Evidence between 1994 and 2007 indicates...

Persistent link: https://www.econbiz.de/10013137598

Self-Fulfilling Expectations and Fluctuations in Aggregate Demand

Woodford, Michael - 2010

The paper presents an intertemporal general equilibrium model with rationing in the product market, in which stationary sunspot equilibria are shown to exist, indicating the possibility of fluctuations in economic activity simply due to self-fulfilling variations in economic agents'...

Persistent link: https://www.econbiz.de/10013138365

Improving GDP Measurement : a Forecast Combination Perspective

Aruoba, S. Borağan - 2011

Two often-divergent U.S. GDP estimates are available, a widely-used expenditure side version, GDPE, and a much less widely-used income-side version GDPI . We propose and explore a "forecast combination" approach to combining them. We then put the theory to work, producing a superior combined...

Persistent link: https://www.econbiz.de/10013120293

Macroeconomic Regimes

Baele, Lieven - 2011

We estimate a New-Keynesian macro model accommodating regime-switching behavior in monetary policy and in macro shocks. Key to our estimation strategy is the use of survey-based expectations for inflation and output. We identify accommodating monetary policy before 1980, with activist monetary...

Persistent link: https://www.econbiz.de/10013124545

Monetary Policy Mistakes and the Evolution of Inflation Expectations

Orphanides, Athanasios - 2011

What monetary policy framework, if adopted by the Federal Reserve, would have avoided the Great Inflation of the 1960s and 1970s? We use counterfactual simulations of an estimated model of the U.S. economy to evaluate alternative monetary policy strategies. We show that policies constructed...

Persistent link: https://www.econbiz.de/10013124836

How Does Risk Selection Respond to Risk Adjustment? Evidence from the Medicare Advantage Program

Brown, Jason - 2011

Governments often contract with private firms to provide public services such as health care and education. To decrease firms' incentives to selectively enroll low-cost individuals, governments frequently "risk-adjust" payments to firms based on enrollees' characteristics. We model how risk...

Persistent link: https://www.econbiz.de/10013126203

A Long-Run Risks Explanation of Predictability Puzzles in Bond and Currency Markets

Bansal, Ravi - 2012

We show that bond risk-premia rise with uncertainty about expected inflation and fall with uncertainty about expected growth; the magnitude of return predictability using these two uncertainty measures is similar to that by multiple yields. Motivated by this evidence, we develop and estimate a...

Persistent link: https://www.econbiz.de/10013100993

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