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Safe Asset Scarcity and Aggregate Demand
Caballero, Ricardo J. - 2016
We explore the consequences of safe asset scarcity on aggregate demand in a stylized IS-LM/Mundell Fleming environment. Acute safe asset scarcity forces the economy into a "safety trap" recession. In the open economy, safe asset scarcity spreads from one country to the other via capital flows,...
Persistent link: https://www.econbiz.de/10012456630
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Keynesian Production Networks and the Covid-19 Crisis : A Simple Benchmark
Baqaee, David; Farhi, Emmanuel - National Bureau of Economic Research - 2021
The Covid-19 crisis is an unusual and seemingly all-encompassing economic shock. On the one hand, it was unquestionably … a negative demand shock that, for fixed prices and incomes, reduced household spending. On the other hand, it was also … unquestionably a negative supply shock that reduced firms' ability to maintain production at pre-pandemic prices and quantities …
Persistent link: https://www.econbiz.de/10012482564
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Stochastic Technical Progress, Nearly Smooth Trends and Distinct Business Cycles
Rotemberg, Julio J. - 2002
This paper investigates whether it is possible to entertain simultaneously two attractive views about US GDP. The first is that long term growth in US GDP is attributable to an empirically plausible specification of random technical progress. The second is that deviations of GDP from a fitted...
Persistent link: https://www.econbiz.de/10012469795
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Is the Business Cycles a Necessary Consequence of Stochastic Growth?
Rotemberg, Julio J. - 1994
We compute the forecastable changes in output, consumption, and hours implied by a VAR that includes the growth rate of private value added, the share of output that is consumed, and the detrended level of private hours. We show that the size of the forecastable changes in output greatly exceeds...
Persistent link: https://www.econbiz.de/10012474286
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The Safety Trap
Caballero, Ricardo J. - 2014
In this paper we provide a model of the macroeconomic implications of safe asset shortages. In particular, we discuss the emergence of a deflationary safety trap equilibrium with endogenous risk premia. It is an acute form of a liquidity trap, in which the shortage of a specific form of assets,...
Persistent link: https://www.econbiz.de/10012458738
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Oligopolistic Pricing and the Effects of Aggregate Demand on Economic Activity
Rotemberg, Julio J. - 1989
We construct a dynamic general equilibrium model in which the typical industry colludes by threatening to punish deviations from an implicitly agreed upon pricing path. We argue that models of this type explain better than do competitive models the way in which the economy responds to aggregate...
Persistent link: https://www.econbiz.de/10012475831
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The Macroeconomic Impact of Microeconomic Shocks : Beyond Hulten's Theorem
Baqaee, David Rezza - 2017
We provide a nonlinear characterization of the macroeconomic impact of microeconomic productivity shocks in terms of reduced-form non-parametric elasticities for efficient economies. We also show how structural parameters are mapped to these reduced-form elasticities. In this sense, we extend...
Persistent link: https://www.econbiz.de/10012455536
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Monetary Policy in the Open Economy Revisited : Price Setting and Exchange Rate Flexibility
Devereux, Michael B. - 2000
This paper develops a welfare-based model of monetary policy in an open economy. We focus on the extent to which monetary policy should be employed in maintaining the exchange rate. The traditional approach maintains that exchange rate flexibility is desirable in the presence of real...
Persistent link: https://www.econbiz.de/10012471102
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Leverage Constraints and the International Transmission of Shocks
Devereux, Michael B. - 2010
Recent macroeconomic experience has drawn attention to the importance of interdependence among countries through financial markets and institutions, independently of traditional trade linkages. This paper develops a model of the international transmission of shocks due to interdependent...
Persistent link: https://www.econbiz.de/10012462429
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Rare Disasters and Exchange Rates
Farhi, Emmanuel - 2008
We propose a new model of exchange rates, which yields a theory of the forward premium puzzle. Our explanation combines …
Persistent link: https://www.econbiz.de/10012464842