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Optimal Monetary and Fiscal Policy in a Currency Union

Gali, Jordi - 2005

We lay out a tractable model for fiscal and monetary policy analysis in a currency union, and analyze its implications for the optimal design of such policies. Monetary policy is conducted by a common central bank, which sets the interest rate for the union as a whole. Fiscal policy is...

Persistent link: https://www.econbiz.de/10012466856

Aggregate Implications of Indivisible Labor, Incomplete Markets, and Labor Market Frictions

Krusell, Per - 2008

This paper analyzes a model that features frictions, an operative labor supply margin, and incomplete markets. We first provide analytic solutions to a benchmark model that includes indivisible labor and incomplete markets in the absence of trading frictions. We show that the steady state levels...

Persistent link: https://www.econbiz.de/10012464776

Anchoring Fiscal Expectations

Leeper, Eric M. - 2009

In this lecture, I argue that there are remarkable parallels between how monetary and fiscal policies operate on the macro economy and that these parallels are sufficient to lead us to think about transforming fiscal policy and fiscal institutions as many countries have transformed monetary...

Persistent link: https://www.econbiz.de/10012463382

A Model of Endogenous Fiscal Deficits and Delayed Fiscal Reforms

Velasco, Andres - 1997

This paper develops a political-economic model of fiscal policy one in which" government resources are a common property' out of which interest groups can finance" expenditures on their preferred items. This setup has striking macroeconomic implications. " First, fiscal deficits and debt...

Persistent link: https://www.econbiz.de/10012472479

Generalizing the Taylor Principle

Davig, Troy - 2005

The paper generalizes the Taylor principle---the proposition that central banks can stabilize the macroeconomy by raising their interest rate instrument more than one-for-one in response to higher inflation---to an environment in which reaction coefficients in the monetary policy rule evolve...

Persistent link: https://www.econbiz.de/10012466797

Liquidity and Governance

Back, Kerry - 2013

Is greater trading liquidity good or bad for corporate governance? We address this question both theoretically and … information concerns her own plans for taking an active role in governance. We show that an increase in the liquidity of the firm …'s stock increases the likelihood of the large investor 'taking the Wall Street walk.' Thus, higher liquidity is harmful for …

Persistent link: https://www.econbiz.de/10012458993

The Effect of Liquidity on Governance

Edmans, Alex - 2011

This paper studies the effect of stock liquidity on blockholders' choice of governance mechanisms. We focus on hedge … measure governance intent rather than only studying instances of actual governance. We find that liquidity increases the … likelihood that a hedge fund acquires a block in a firm. Conditional upon acquiring a stake, liquidity reduces the likelihood …

Persistent link: https://www.econbiz.de/10012461091

Tough Policies, Incredible Policies?

Velasco, Andres - 2003

We revisit the question of what determines the credibility of macroeconomic policies here, of promises to repay public debt. Almost all thinking on the issue has focused on governments' strategic decision to default (or erode the value of outstanding debt via inflation/devaluation). But...

Persistent link: https://www.econbiz.de/10012468765

Liquidity and Inefficient Investment

Hart, Oliver D. - 2013

We study the role of fiscal policy in a complete markets model where the only friction is the nonpledgeability of human capital. We show that the competitive equilibrium is constrained inefficient, leading to too little risky investment. We also show that fiscal policy following a large negative...

Persistent link: https://www.econbiz.de/10012459478

International Liquidity Management : Sterilization Policy in Illiquid Financial Markets

Caballero, Ricardo J. - 2000

the international liquidity management aspect of sterilization over the traditional monetary one, a re-focus that seems … liquidity management issues more generally …

Persistent link: https://www.econbiz.de/10012471010

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