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Reading the Recent Monetary History of the U.S., 1959-2007

Fernández-Villaverde, Jesús - 2010

In this paper we report the results of the estimation of a rich dynamic stochastic general equilibrium (DSGE) model of the U.S. economy with both stochastic volatility and parameter drifting in the Taylor rule. We use the results of this estimation to examine the recent monetary history of the...

Persistent link: https://www.econbiz.de/10012462722

Money Growth Monitoring and the Taylor Rule

Christiano, Lawrence J. - 2001

Using a series of examples, we review the various ways in which a monetary policy characterized by the Taylor rule can inject volatility into the economy. In the examples, a particular modification to the Taylor rule can reduce or even entirely eliminate the problems. Under the modified policy,...

Persistent link: https://www.econbiz.de/10012470179

Optimal Monetary Policy in a 'Sudden Stop'

Braggion, Fabio - 2007

In the wake of the 1997-98 financial crises, interest rates in Asia were raised immediately, and then reduced sharply. We describe an environment in which this is the optimal monetary policy. The optimality of the immediate rise in the interest rate is an example of the theory of the second...

Persistent link: https://www.econbiz.de/10012465398

Supply-Side Policies and the Zero Lower Bound

Fernández-Villaverde, Jesús - 2011

This paper examines how supply-side policies may play a role in fighting a low aggregate demand that traps an economy at the zero lower bound (ZLB) of nominal interest rates. Future increases in productivity or reductions in mark-ups triggered by supply-side policies generate a wealth effect...

Persistent link: https://www.econbiz.de/10012461115

Nominal Rigidities and the Dynamic Effects of a Shock to Monetary Policy

Christiano, Lawrence J. - 2001

an expansionary shock to monetary policy. Of these features, the most important are staggered wage contracts of average …

Persistent link: https://www.econbiz.de/10012470317

Monetary Policy Shocks : What Have We Learned and to What End?

Christiano, Lawrence J. - 1998

This paper reviews recent research that grapples with the question: What happens after an exogenous shock to monetary … exogenous shock to monetary policy. Nevertheless, there is considerable agreement about the qualitative effects of a monetary … policy shock in the sense that inference is robust across a large subset of the identification schemes that have been …

Persistent link: https://www.econbiz.de/10012472408

Expectation Traps and Discretion

Chari, V. V. - 1996

We argue that discretionary monetary policy exposes the economy to welfare-decreasing instability. It does so by creating the potential for private expectations about the response of monetary policy to exogenous shocks to be self-fulfilling. Among the many equilibria that are possible, some have...

Persistent link: https://www.econbiz.de/10012473315

The Effects of Monetary Policy Shocks : Some Evidence from the Flow of Funds

Christiano, Lawrence J. - 1994

This paper uses the Flow of Funds accounts to assess the impact of a monetary policy shock on the borrowing and lending … sectors can be summarized as follows. First, following a contractionary shock to monetary policy, net funds raised by the … business sector increases for roughly a year. Thereafter, as the recession induced by the policy shock gains momentum, net …

Persistent link: https://www.econbiz.de/10012474229

Identification and the Liquidity Effect of a Monetary Policy Shock

Christiano, Lawrence J. - 1991

Conventional wisdom holds that unanticipated expansionary monetary policy shocks cause transient but persistent decreases in real and nominal interest rates. However a number of econometric studies argue that the evidence favors the opposite view, namely that these shocks actually raise, rather...

Persistent link: https://www.econbiz.de/10012475068

Taylor Rules in a Limited Participation Model

Christiano, Lawrence J. - 1999

We use the limited participation model of money as a laboratory for studying the operating characteristics of Taylor rules for setting the rate of interest. Rules are evaluated according to their ability to protect the economy from bad outcomes such as the burst of inflation observed in the...

Persistent link: https://www.econbiz.de/10012471783